Robust Semiconductor Trajectery To Lift These Players

The technology sector’s outlook appears promising and highlights a bullish trajectory in Malaysia’s semiconductor industry, driven by a projected 16% increase in global semiconductor sales for Calendar Year (CY24), according to the Kenanga Investment Bank (Kenanga) report today (Wednesday). This growth follows a period of sustained expansion from November 2023 to March 2024, underpinned by strong demand for memory and logic ICs.

Kenanga remains optimistic, maintaining an OVERWEIGHT stance on the sector amidst expectations of improved order visibility and strategic expansions. Malaysian semiconductor firms are anticipated to benefit significantly, setting the stage for a robust second half of CY24.

Kenanga recommends investors consider positions in leading stocks such as Inari Amertron Berhad (INARI), Kelington Group Bhd (KGB), and LGMS Berhad (LGMS). INARI, with a target price adjusted to RM4.60, stands out due to its expanding footprint in China’s smartphone and AI markets, bolstered by upcoming product launches and enhanced manufacturing capabilities.

Similarly, the house said KGB remains a compelling choice with its substantial order book of RM1.3 billion and strategic position in multiple markets, including Malaysia and China. Kenanga’s target price for KGB is RM4.10, reflecting its positive outlook on the front-end wafer fab expansion anticipated in the latter half of CY24.

For investors eyeing cybersecurity opportunities, LGMS emerges as a prime candidate with its innovative Star Sentry product and anticipated surge in demand from local corporations post the enactment of Cybersecurity Bill 2024. Kenanga recommends LGMS with a target price of RM1.90, citing its strong market position and growth potential in the cybersecurity segment.

Kenanga reaffirms its OVERWEIGHT rating on Malaysia’s technology sector, emphasising the promising outlook driven by robust global semiconductor sales forecasts and strategic advancements among key players. Investors are encouraged to consider positions in INARI, KGB, and LGMS, poised to capitalize on sector-wide growth and emerging opportunities in AI, cybersecurity, and semiconductor manufacturing.

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