PETALING JAYA: Dagang Nexchange Bhd (Dnex) is expected to chart another strong year ahead, owing to, among others, the increasing wafer shipment and elevated crude oil prices.
Hong Leong Investment Bank (HLIB) Research said it strongly believes Dnex’s growth prospects in the financial year 2023-2024 (FY23-FY24) are intact.
This is on the back of Malaysia Silterra Malaysia Sdn Bhd’s increasing product average selling prices (ASPs), rising wafer shipments and Silterra’s capacity expansion by an additional 10%, slated for completion in early 2023.
The research house also sees elevated crude oil prices and improved production and off-take volumes from Ping Petroleum Ltd’s Anasuria asset with the replacement of its subsea riser, scheduled in September 2022.
Dnex went into the business of wafer fabs following its purchase of Malaysian semiconductor manufacturer Silterra in July last year.
It also acquired an additional 60% in Ping Petroleum in 2021.
“In the medium term, Dnex’s growth will also be underpinned with its new Avalon greenfield, up and coming in mid-2025 (FY26), which would potentially quadruple Ping Petroleum’s current output, and its recent memorandum of understanding with Foxconn to develop a new 12-inch wafer fab to support its electric vehicle ventures.
“We are excited and upbeat about DNeX’s luminous growth prospects in the coming years,” it said.
CGS-CIMB Research expects Dnex to register another strong year ahead with a 16% core net profit growth on the back of higher wafer ASP on increasing mask layer and robust utilisation at Silterra, backed by its three long-term agreements.
The research firm also sees gradual recovery in Ping Petroleum’s production volume following the completion of the debottlenecking exercise by September 2022 and favourable foreign exchange assumption of RM4.20-RM4.25 to the dollar.
In addition, it said Silterra’s expansion remains on track as the group plans to increase its installed capacity by 10% with the addition of Fab 1E in the first half of calendar year 2023.
This will allow Silterra to raise its exposure in emerging technology, such as silicon photonics and microelectromechanical systems that command higher ASP.
“However, we have cut our FY23-FY24 earnings per share forecasts by 3% to 11%, as we expect a more gradual volume growth at Ping Petroleum amid concerns over a slowdown in the global economy in the calendar year 2023,” it said.
For its fourth quarter ended June 30, 2022 (4Q22), Dnex recorded a net profit of RM160.59mil on a revenue of RM430.29mil, mainly supported by a robust contribution from its technology and energy segments.
There are no comparative 4Q21 results as there had been a change in the financial year-end from Dec 31 to June 30.