Increased demand for artificial intelligence is driving the technology sector
Strong demand for AI boosts valuations, and technology stocks advance the upward cycle
(KUALA LUMPUR, 5th) As demand for artificial intelligence continues to rise, and we are currently in a recovery cycle, the market anticipates that this will drive the technology sector to strengthen, and at the same time call for the purchase of Innerley Meichang ( $INARI(0166.MY$) and Pacific Malaysia ( $MPI(3867.MY$)。
CIMB analysts pointed out that since the technology sector has begun a new upward cycle, it is necessary to re-estimate the valuations of major companies and raise the ratings from the original “neutral” to “increase holdings.”
Analysts said that the current capacity utilization rate in the technology sector will rise further, and this phenomenon is expected to begin in the second half of this year.
Looking back at the first quarter of this year, the performance of the Malaysian Technology Index was mediocre, which was inferior to the Malaysian FTSE Composite Index; however, as the performance of major technology companies improved and was quite optimistic about the outlook, the technology index rebounded, surpassing the Composite Index, which is 15% higher between May and June.
Overall, analysts prefer outsourced semiconductor assembly and testing (OSAT) vendors, with Innerley Macon and Pacific Malaysia being preferred.
Technology stocks are welcoming the dawn
On the other hand, Kennag Investment Bank research analysts also pointed out that in fact, the technology sector has all begun to reveal different information. Among them, the World Semiconductor Trade Statistics Organization (WSTS) recently raised the 2024 global semiconductor sales forecast from 13.1% to 16%.
This was mainly due to continued strong demand for memory and logic integrated circuits, and semiconductor sales increased year-on-year for 6 consecutive months.
Analysts said that as far as back-end technology companies are concerned, orders are generally expected to increase in the next few quarters, and this is consistent with the investment bank's view that the second half of 2024 will enter a recovery.
Looking at the semiconductor packaging and testing field, analysts continue to be optimistic about Innerley Meichang. The main thing is that in the short term, an American smartphone with AI functions will soon be launched, which will help drive the company's stock price.
Analysts added that since purchasing phones during the pandemic, they have begun to enter the cycle of replacing phones, so strong sales are expected.
According to information, the company is currently planning to use the existing strategy, and is also setting up a joint factory in China to reduce the risk of excessive customer concentration, and the Chinese smartphone market also has huge potential.
Analysts are also optimistic about Ma Pacific and Science and Technology Group ( $KGB(0151.MY$), the main thing is that capacity utilization is expected to continue to increase, and more contracts can also be obtained at the same time.
Automotive semiconductors still have challenges
As for the automotive semiconductor sector, analysts said that although the worst is over, customers still need to face the problem of adjusting inventory.
Furthermore, as the development of electric vehicle charging stations is still not as good as expected, continued market weakness will be one of the main challenges.
(KUALA LUMPUR, 5th) As demand for artificial intelligence continues to rise, and we are currently in a recovery cycle, the market anticipates that this will drive the technology sector to strengthen, and at the same time call for the purchase of Innerley Meichang ( $INARI(0166.MY$) and Pacific Malaysia ( $MPI(3867.MY$)。
CIMB analysts pointed out that since the technology sector has begun a new upward cycle, it is necessary to re-estimate the valuations of major companies and raise the ratings from the original “neutral” to “increase holdings.”
Analysts said that the current capacity utilization rate in the technology sector will rise further, and this phenomenon is expected to begin in the second half of this year.
Looking back at the first quarter of this year, the performance of the Malaysian Technology Index was mediocre, which was inferior to the Malaysian FTSE Composite Index; however, as the performance of major technology companies improved and was quite optimistic about the outlook, the technology index rebounded, surpassing the Composite Index, which is 15% higher between May and June.
Overall, analysts prefer outsourced semiconductor assembly and testing (OSAT) vendors, with Innerley Macon and Pacific Malaysia being preferred.
Technology stocks are welcoming the dawn
On the other hand, Kennag Investment Bank research analysts also pointed out that in fact, the technology sector has all begun to reveal different information. Among them, the World Semiconductor Trade Statistics Organization (WSTS) recently raised the 2024 global semiconductor sales forecast from 13.1% to 16%.
This was mainly due to continued strong demand for memory and logic integrated circuits, and semiconductor sales increased year-on-year for 6 consecutive months.
Analysts said that as far as back-end technology companies are concerned, orders are generally expected to increase in the next few quarters, and this is consistent with the investment bank's view that the second half of 2024 will enter a recovery.
Looking at the semiconductor packaging and testing field, analysts continue to be optimistic about Innerley Meichang. The main thing is that in the short term, an American smartphone with AI functions will soon be launched, which will help drive the company's stock price.
Analysts added that since purchasing phones during the pandemic, they have begun to enter the cycle of replacing phones, so strong sales are expected.
According to information, the company is currently planning to use the existing strategy, and is also setting up a joint factory in China to reduce the risk of excessive customer concentration, and the Chinese smartphone market also has huge potential.
Analysts are also optimistic about Ma Pacific and Science and Technology Group ( $KGB(0151.MY$), the main thing is that capacity utilization is expected to continue to increase, and more contracts can also be obtained at the same time.
Automotive semiconductors still have challenges
As for the automotive semiconductor sector, analysts said that although the worst is over, customers still need to face the problem of adjusting inventory.
Furthermore, as the development of electric vehicle charging stations is still not as good as expected, continued market weakness will be one of the main challenges.
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Compare technology investment banks!
$DBS Group Holdings(D05.SG$[Follow the market] TP 3.60
$GHLSYS(0021.MY$[Gain] TP 1.10
$INARI(0166.MY$[Beyond the Market] TP 4.60
$JHM(0127.MY$[Follow the market] TP 0.60
$KGB(0151.MY$[Beyond the Market] TP 4.10
$KESM(9334.MY$[Follow the market] TP 7.00
$LGMS(0249.MY$[Beyond the Market] TP 1.90
$MPI(3867.MY$[Beyond the Market] TP 46.80
$NATGATE(0270.MY$[Beyond the Market] TP 2.10
$OPPSTAR(0275.MY$[Beyond the Market] TP 1.70
$PIE(7095.MY$[Beyond the Market] TP 6.80
$SKPRES(7155.MY$[Beyond the Market] TP 1.40
$UNISEM(5005.MY$[Follow the market] TP 3.70
※ TP in the table above is the target price. The unit is ringgit (Source: Kennag Investment Bank Research)
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104789406 : $DBS Group Holdings(D05.SG)$[Follow the market] TP 3.60