TA Research stays overweight on semicon sector


In March, global semiconductor sales grew by 3.7% month-on-month and 17.8% year-on-year to US$41.1bil and this marked a new high since November 2018, and the 14th consecutive month sales grew on a YoY basis.

KUALA LUMPUR: TA Securities Research is maintaining its overweight outlook on the semiconductor sector with buy calls on Inari, Unisem, MPI and Elsoft after the strong global chip sales and billings in March..

In its report on Monday, the research house retained its buy for Inari (TP: RM4.33; 40 times prioce-to-earnings), Unisem (TP: RM10; 38.0 times PE) and MPI (TP: RM54.35; 38 times PE), and Elsoft (TP: 86 sen; 20 times PE).

“Within our semiconductor universe, we continue to favour outsourced semiconductor assembly and test providers including Inari, Unisem and MPI for their clear order visibility and earnings growth prospects.

“We expect them to continue benefitting from strong chip demand fuelled by increasing digitalisation globally amid the COVID-19 pandemic, emerging areas including global 5G rollout, as well as prospects of a global economic recovery, ” it said.

However, it cautioned key downside risks include: i) a prolonged Covid-19 pandemic weighing on economic growth and sentiment, ii), a prolonged and heightened trade war, iii) weaker-than-expected sales, and iv) a weakening of the US dollar against the ringgit.

In March, global semiconductor sales grew by 3.7% month-on-month and 17.8% year-on-year to US$41.1bil and this marked a new high since November 2018, and the 14th consecutive month sales grew on a YoY basis.

On a quarterly basis, 1Q21’s sales increased 3.6% QoQ and 17.8% YoY to US$123.2bil, also at the highest since 3Q18.

“The robust numbers are aligned with the strong chip demand observed by semiconductor players locally and abroad.

“For 2021, the World Semiconductor Trade Statistics forecasts global semiconductor sales growing 6.6% to a record high of US$469.4bil, ” it said.

TA Research also said billings in March 2021 climbed by 4.2% MoM and 47.9% YoY to US$3.27bil to mark another record high. It was also the fourth and 18th consecutive month billings grew on a MoM and YoY basis.

The strong trajectory was driven by robust secular semiconductor demand across end markets fuelled by increasing digitalisation globally amid the Covid-19 pandemic.

The 1Q21’s billings grew 19.1% QoQ and 36.5% YoY to US$9.45bil.

TA Research said for 2021, billings are on track for another record year especially with fabs worldwide ramping capacity during the prevailing global chip shortage.

“Key drivers include the advancements to leading-edge nodes, global 5G rollout, and robust fab investments in China amid ambitions to achieve chip self-sufficiency, ” it said.

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