CEO Morning Brief

Local Tech Stocks in the Red, Tracking US Chipmakers' Overnight Losses

Publish date: Thu, 11 Aug 2022, 08:42 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Aug 10): Technology heavyweights such as Malaysian Pacific Industries Bhd (MPI) and ViTrox Corp Bhd were among the top losers on the local bourse on Wednesday (Aug 10), tracking overnight losses on the US Nasdaq.

The Nasdaq fell 150.53 points or 1.19% to 12,493.93 on Tuesday (Aug 9), following a dismal forecast from tech giant Micron Technology Inc.

Reuters reported that shares in Micron slid 3.7%, after the memory-chip maker cut its fourth-quarter revenue forecast and warned of negative free cash flow the following quarter, as demand ebbed for chips used in personal computers and smartphones.

"Micron's warning, a day after Nvidia Corp forecast weakness in its gaming business, knocked the Philadelphia Semiconductor Index 4.39% lower, with all 30 components down. The index has fallen almost 8% in the past three days," the news agency reported.

Back at home, Bursa's Technology index emerged as the top loser in the broader market, settling 1.95 points or 2.94% lower at 64.45. Based on Bloomberg data, 31 components of the tech index were in the negative territory; only three counters gained while eight settled unchanged.

Semiconductor players, in particular, felt more of the heat from Nasdaq's overnight losses.

MPI — which is currently trading at a historical price-to-earnings ratio (PER) of 18.91 times — shed RM1.08 or 3.39% to RM30.82, giving it a market capitalisation of RM6.47 billion. Year-to-date (YTD), the counter has tumbled 37.74% from RM49.50 apiece.

ViTrox, with a PER of 36.83 times, settled down 28 sen or 3.73% at RM7.22, which values the group at RM6.82 billion. It has dropped 26.63% from when it was trading at RM9.84 on Jan 3.

Inari Amertron Bhd, meanwhile, closed at RM2.82, down 13 sen or 4.41% from the day before, and down 30.37% YTD. It has a market capitalisation of RM10.46 billion.

Pentamaster Corp Bhd's share price closed 12 sen or 3.02% lower at RM3.86, followed by Unisem (M) Bhd, which fell 12 sen or 4.05% to RM2.84, Greatech Technology Bhd (down 2.58% or 10 sen to RM3.78), UWC Bhd (down 10 sen or 2.54% to RM3.83), Frontken Corp Bhd (down nine sen or 3.21% to RM2.71), and D&O Green Technologies Bhd (down eight sen or 2.01% to RM3.90).

Although the tech sector continues to be under pressure from rate hikes and other macroeconomic issues, MIDF Research remained positive about the sector, given that demands from 5G-, artificial intelligence-, and electric vehicle-related products and services were still solid and were the key enablers to ignite the digital economy world widely.

"Emerging technologies depend heavily on the semiconductor industry to provide the necessary computing power. Therefore, our positive stance on this sector remained due to its robust mid-long-term outlook, in tandem with the increasing adoption and integration of smart technologies," said MIDF in a note dated Aug 5.

Its top pick semiconductor companies were Inari ("buy", target price [TP]: RM3.65) and Unisem ("buy", TP: RM4.07) given the their exposure to growing RF contents in 5G smartphones use and adoption.

Source: TheEdge - 11 Aug 2022

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