PETALING JAYA: Although most of the technology companies are projecting shorter earnings visibility, RHB Research says it expects stronger orders going into the sector’s financial year 2025 (FY25).
This would be premised on a volume recovery due to various new opportunities and clientele gained from plausible circumstances related to China Plus One and Taiwan Plus One, the research house said in a report yesterday.
The Bursa Malaysia Technology Index is bottoming out, after taking a huge dive over the past months due to the weaker-than-expected sector recovery, strengthening of the ringgit against the US dollar, the potential imposition of tariffs or sanctions from the United States and the overall risk-off sentiment.
According to RHB Research, the sector’s third-quarter 2024 (3Q24) results were mixed, with four out of the nine companies under its coverage missing estimates on slower-than expected revenue growth, margin pressure and foreign exchange (forex) impact, while the other five companies chalked in-line numbers.
However, the research house said it expects 4Q24 earnings should improve on favourable forex rates and stable loading factors, with potential upside from some urgent delivery of orders due to impending tariff hikes to be imposed by the United States.
In terms of sector top picks, the research house said it liked Malaysian Pacific Industries
Bhd for its exposure in the semiconductor space, the demand recovery in China, as well as the commencement of new programmes and customers.
CTOS Digital Bhd, meanwhile, is RHB Research’s pick in the domestic-centric space, premised on the digitalisation trend as well as the company’s exposure to the financial technology or fintech segment.
The downside risks for the sector include softening smartphone sales, favourable forex movements, strong consumer demand and obsolescence of technology.
RHB Research has also maintained its “overweight” call on the sector.
