KUALA LUMPUR: TECHNOLOGY []-related stocks advanced in early trade on Wednesday, Aug 18 after AmResearch reaffirmed its overweight call on the semiconductor sector.
The research house said the recent sentiment selling was due to downgrade reports on US industry leaders which were namely AMD and Intel.
"Nevertheless, we hold firm to our conviction and believe that this sentiment is temporary, especially in light of recent announcements from SIA (Semiconductor Industry Association) and SEMI (Semiconductor Equipment Manufacturers Industry) ' the two most authoritative trackers on the sector," it said.
At 9.30am, MPI was up nine sen to RM5.99, Unisem rose one sen to RM2.15, Eng Teknologi added three sen to RM1.96 while JCY was up two sen to RM1.20.
According to SIA, the semiconductor industry increased sales by 7.1% in 2Q10 year-on-year, more than doubling the pace recorded at 2.8% in 1Q10. Meanwhile, SIA maintains a positive outlook for the rest of the year.
SIA data showed booking growth for June is up 10.4% month-on-month (m-o-m), a double up from May's number of 5.7% m-o-m.
Book-to-bill ratio stood at 1.19 times gaining pace from 1.13 times in April and May. More importantly, the ratio increase came in from an increase in booking as well as delivery, which signals that demand appetite has not slowed down SEMI also reported wafer shipments in 2Q10 increased by 7% against 1Q10, a sign for higher output along the supply chain in 3Q10.
AmResearch said the sector continues to enjoy a sweet spot from combination demand growth maintained strength, which is set to continue well in 4Q10 though constraints along the supply chain will hamper speed of order delivery, which may well gain manufacturers some relative pricing power.
"We reaffirm BUY on MPI (FV=RM8.90, 1.7 times price-to-book) and Unisem (FV=RM3.25, 1.9 times price-to-book). Our valuation is still below peak boom time 2.3 times price-to-book (observed in 2004-2005). Unisem stands to gain more from such constraints as its operation in China comes on stream as early as end of 3Q10," it said.
The research house said the recent sentiment selling was due to downgrade reports on US industry leaders which were namely AMD and Intel.
"Nevertheless, we hold firm to our conviction and believe that this sentiment is temporary, especially in light of recent announcements from SIA (Semiconductor Industry Association) and SEMI (Semiconductor Equipment Manufacturers Industry) ' the two most authoritative trackers on the sector," it said.
At 9.30am, MPI was up nine sen to RM5.99, Unisem rose one sen to RM2.15, Eng Teknologi added three sen to RM1.96 while JCY was up two sen to RM1.20.
According to SIA, the semiconductor industry increased sales by 7.1% in 2Q10 year-on-year, more than doubling the pace recorded at 2.8% in 1Q10. Meanwhile, SIA maintains a positive outlook for the rest of the year.
SIA data showed booking growth for June is up 10.4% month-on-month (m-o-m), a double up from May's number of 5.7% m-o-m.
Book-to-bill ratio stood at 1.19 times gaining pace from 1.13 times in April and May. More importantly, the ratio increase came in from an increase in booking as well as delivery, which signals that demand appetite has not slowed down SEMI also reported wafer shipments in 2Q10 increased by 7% against 1Q10, a sign for higher output along the supply chain in 3Q10.
AmResearch said the sector continues to enjoy a sweet spot from combination demand growth maintained strength, which is set to continue well in 4Q10 though constraints along the supply chain will hamper speed of order delivery, which may well gain manufacturers some relative pricing power.
"We reaffirm BUY on MPI (FV=RM8.90, 1.7 times price-to-book) and Unisem (FV=RM3.25, 1.9 times price-to-book). Our valuation is still below peak boom time 2.3 times price-to-book (observed in 2004-2005). Unisem stands to gain more from such constraints as its operation in China comes on stream as early as end of 3Q10," it said.
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