Aurelius Technologies Bhd has been trending up in the past 5 days, gaining some 12% to close at RM3.04. It has already breached the RM2.80 resistance level and looks good to go beyond the current share price.

Investors should be encouraged by the share performance over the past year, gaining some 30%. The counter was at its 52-week low of RM2.10 last June.

The heightened interest in Aurelius could stem from the anticipation upcycle in the semicon industry. The electronic manufacturing services provider has shown resilience and adaptability within its domain. It is investing in areas which will enhance its IoT and automotive manufacturing capabilities especially in making EV components.

The company plans to undertake a two-phase expansion project on industrial land acquired in Kulim Hi-Tech Park. This will double its built-up area from the current 260,000 sq ft to 520,000 sq ft.

The company will likely see a huge leap in its automotive parts manufacturing, facilitate outsourced semiconductor assembly and testing (OSAT) business. In addition, this could pave the way for Aurelius to go into advanced electronics manufacturing.

However, semicon related companies supplying non-China handsets and traditional servers continued to see subdued demand. Meanwhile automotive also turned weaker due to EV demand pullback. If you look at the increasing average inventory days in the December 2023 quarter for some of the semicon-related companies, this may also signal a prolonged supply glut and soft demand across major end-industries.

Investors could shy away from this sector due to elevated valuations for the industry despite recent weak earnings delivery. That said, Investors can look forward to better earnings from Aurelius although it will continue to face tough challenges ahead.