Demand likely to hold tech sector in good stead

KUALA LUMPUR: The technology sector is poised to continue to benefit from the growing demand for electric vehicles (EVs), artificial intelligence and 5G-related products.

Based on this premise, MIDF Research remains bullish on the sector as a critical enabler of the global digital economy.

The research house said it is poised for exponential development as a result of its adoption and integration.

However, it acknowledged the technology sector continues to be weighed down by rate-rise pressures and other macroeconomic difficulties in the global economy.

MIDF Research said the first-half results of the technology companies under its coverage were mixed on this front.

“Three companies registered earnings within expectations – D&O Green Technologies (DGT) Bhd, Unisem (M) Bhd and Datasonic Group Bhd, while three came in below expectations – Inari Amerton Bhd, Globetronics Technology Bhd and MyEG Services Bhd,” MIDF Research said.

It noted their mixed performances were due to a challenging economic climate for technology companies, including rising inflation, interest rate hikes and global supply chain issues, among others.

“Nonetheless, given that 5G is expected to generate multi-year growth, similar to the 3G to 4G transition cycle, we believe our tech businesses will continue to be the primary beneficiaries of 5G technology,” it said.

MIDF Research continues to like DGT, rating it a “buy” with a target price (TP) of RM4.58, as it is one of the top-five LED producers globally and the company is positioned to benefit from the EV market’s accelerating expansion.

It also prefers Inari, rating it a “buy” with a RM3.53 TP, because its future as Malaysia’s largest outsourced semiconductor assembly and test (OSAT) provider remains intact.

“Despite the lower projection on revenue from the smartphone segment in 2023, management expects it will rebound, supported by content value growth and new design wins, such as radio frequency double-sided moulding system-in-package in the next-generation smartphone models,” it said.

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