KUALA LUMPUR (May 21): Frontken Corp Bhd is unaffected by sanctions from the US targeting tech giant Huawei, as a key supplier for the firm still requires the Malaysian company's services in producing Apple's A13 chip, said Maybank Investment Bank.
The investment bank said TSMC will continue to provide security updates for Huawei's Kirin 980 processor and supply Kirin 985 processors as its early evaluation shows that it meets export control regulations.
The tech giant is still reliant on TSMC for its processors as Huawei is only able to manufacture chips as small as 14nm, while TSMC is able to produce chips that are 7nm and smaller.
Moreover, TSMC is also is gearing up for volume production of the A13 chip, which will power new iPhones this year, which use the 7nm and 7nm processes.
The investment bank believes this will bode well for Frontken given its the precision-cleaning expertise.
"The fact that the 7nm process itself creates about four times more precision cleaning works than 16-20nm," said the bank.
"A knee-jerk reaction to its share price provides a golden opportunity to buy. Target price of RM1.85 remains unchanged based on FY20 price-to-earnings ratio of 23.5 times.
"Leveraged to this 7nm, but unlike the semiconductor business, which can be cyclical, Frontken should be much more resilient as regardless if you are running at 90% utilisation or 40% utilisation the equipment will still need to be cleaned," it said.
He said this provides a steady stream of recurring income despite any downside risk from Huawei's smartphone sales.
Huawei case is good. Semiconductor comapnies are moving out of the US and to be near China - by far the largest consumer. Singapore is the chosen hub. No tariffs. Needs more cleaning and testing - Frontkn's business. What's there not to like?
Aminvest giving discount from its valuation of 36cents, hongleong giving valuation of 33cents, hwangaffin giving 31cents valuation (all these not target price, is fair valuation price), so by right the actual fair price is around 0.33 to 0.36
But the big shark still collecting the super cheap shares around 0.18 to 0.19
But before Armada being awarded the court winning for Woodside claim, 20cents gap up, that time will worth for 0 50+++
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
lai81533
987 posts
Posted by lai81533 > 2019-05-21 14:34 | Report Abuse
strong to buy and hold tight tight