KUALA LUMPUR (July 24): PublicInvest Research has assigned "overweight" ratings to the technology, consumer, gaming, construction, and healthcare sectors, while the glove sector received an "underweight" rating due to the acute supply situation in the industry.

The research note observed that the current sell-off of Malaysian technology stocks is excessive, considering the less aggressive interest rate increases projected for the US.

As such, PublicInvest also believes that the technology sector may have bottomed in June, and is expected to see a gradual pickup in the second half of this year (2H2023).

It based such optimism on indicators from Semiconductor Equipment and Materials International and the Semiconductor Industry Association (SIA), suggesting a likely recovery in 2H2023, as well as increasing capital expenditure from global automotive semiconductor players and the surge in artificial intelligence usage in various fields.

Inari Amertron Bhd is PublicInvest's top pick for the sector, given higher earnings contributions from new product offerings.

Consumer sector favoured due to defensive nature

Althought the sector is expected to record slower earnings growth in 2H2023, given high base effects and normalisation in spending, the research house remains optimistic about the consumer sector given its defensive nature.

The sector’s top-line growth is expected to continue — albeit at a slower pace on the high base effect from the economic reopening last year — given that consumer consumption continues to be driven by a healthy labour market and recovery in the tourism sector.

PublicInvest’s preferred pick for the sector is CCK Consolidated Holdings Bhd, due to the defensive nature of its business, in addition to seeing robust demand from its Indonesian operations.

CCK’s business comprise four segments, namely retail, poultry, prawn and food services, the company’s website showed.

'Overweight' call maintained for gaming, construction, healthcare

On the gaming sector, the research house prefers casino operators over number forecast operators (NFOs), as sentiment on NFO players is affected by political uncertainties, due to the upcoming state election.

PublicInvest continues to like Genting Bhd given its anticipation that the casino operator’s earnings should gradually recover in the medium term with the improvement in international travel.

Meanwhile, PublicInvest anticipates a rise in construction activities in 2H2023, driven by infrastructure spending, affordable housing initiatives and foreign investments, and foresees improved earnings from the construction sector due to increased progress billings.

The research house’s top picks for the construction sector are Gamuda Bhd and IJM Corp Bhd, due to their versatility in not being limited to Peninsular Malaysia but also present in Sabah and Sarawak, with low net gearing.

As for healthcare, the research house said growing domestic in-patient volumes and bed occupancy rates amid the expected resurgence of medical tourism put the sector in the spotlight.