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Focus Malaysia
a day ago
- Business
- Focus Malaysia
Local tech sector holds steady with stronger growth expected in 2Q
COLLECTIVELY, the tech sector result was largely in line with expectations, with five companies meeting projections and one outperforming estimates. However, three players had numbers that missed expectations, due to slower order recognition, margin compression, and FX impact. Most players booked declining earnings, except for Coraza Integrated Technology (Coraza), which maintained its revenue despite margin pressures from ASP erosion, pre-opening expenses, and higher costs. Engineering support players continue to book robust revenue growth, seen as a precursor to growth in automated test equipment or ATE manufacturers as well as outsourced semiconductor assembly and test. 'Hence, we expect stronger numbers heading into quarter two (2Q) and the second half (2H), supported by a broader recovery across the semiconductor supply chain,' said RHB. Order and revenue trends remain constructive, supported by a sector recovery and potential front-loading activities, despite the ongoing uncertainty from US tariffs. Most management teams have adopted an optimistic tone, on stronger loadings with the replacement cycle, new product introductions, a demand recovery, and technology advancements. These trends are further bolstered by new opportunities emerging from China Plus One and Taiwan Plus One strategies. 'Our outlook still leans towards the positive, that Malaysia stands to benefit from US-imposed tariffs, via short-term rushed orders and long-term manufacturing reallocation activities,' said RHB. The country's robust ecosystem, talent pool, and infrastructure provide a competitive advantage. While excessive inventory build-up could raise demand uncertainties, the sector remains in an upcycle, showing minimal signs of major disruptions so far. Malaysian Pacific Industries and UNI are key beneficiaries of the chip sector recovery, China's demand rebound, and the commencement of new programmes and customers. On the domestic front, CTOS Integrated Technology is a standout, as it leverages on the digitalisation trend and has exposure to the fintech segment. Among the smaller-cap stocks, Coraza should see a sterling earnings rebound, supported by robust revenue growth. Tariff concerns slowing end demand, slower-than-expected orders, technology obsolescence, and unfavourable FX movements. —June 20, 2025 Main image: New Straits Times
The Star
2 days ago
- Business
- The Star
Tech sector on the upswing as recovery emerges
RHB Research said it believes Malaysia stands to benefit from US-imposed tariffs via short-term rushed orders and long-term manufacturing reallocation activity. PETALING JAYA: RHB Research remains positive on the local technology sector despite muted earnings in the first quarter of the year (1Q25), as stronger revenue trends and optimistic guidance from many companies point to a continued recovery. 'Engineering support players continue to book robust revenue growth – seen as a precursor to growth for automated test equipment manufacturers as well as outsourced semiconductor assembly and test players,' the research house said. RHB Research expects stronger numbers in the second quarter and second half of the year, supported by a broader recovery across the semiconductor supply chain. It forecast earnings growth for the sector at 2% year-on-year (y-o-y) for this year and 40% y-o-y next year. 'Order and revenue trends remain constructive, supported by a sector recovery and potential front-loading activities, despite the ongoing trade uncertainty. 'Most management teams have adopted an optimistic tone due to stronger loadings with the replacement cycle, new product introductions, demand recovery, and technology advancements. These trends are further bolstered by new opportunities emerging from the China Plus One and Taiwan Plus One strategies to diversify supply chains,' RHB Research added. The research house said it believes Malaysia stands to benefit from US-imposed tariffs via short-term rushed orders and long-term manufacturing reallocation activity. 'The country's robust ecosystem, talent pool, and infrastructure provide a competitive advantage. While excessive inventory build-up could raise demand uncertainty, the sector remains in an upcycle, showing minimal signs of major disruptions so far,' RHB Research said. It pointed out that after the industry's sell-down, the sector's valuations have become compelling, offering an attractive risk reward ratio. The research house said the sector is trading at 20 times its forward price-earnings ratio and expects a re-rating as earnings strengthen and global uncertainties ease. Reviewing the sector's 1Q25 results, RHB Research said the results were largely in line with expectations, with five companies under its coverage meeting projections and one outperforming estimates. However, three companies had numbers that missed expectations, due to slower order recognition, margin compression, and foreign exchange impacts. It pointed out that most players booked declining earnings, except for Coraza Integrated Technology Bhd , which maintained its revenue despite margin pressures from average selling price erosion, pre-opening expenses, and higher costs. RHB Research's top picks for the sector are Malaysian Pacific Industries Bhd and Unisem (M) Bhd which are key beneficiaries of the chip sector's recovery, China's demand rebound, and the commencement of new programmes and customers. It added that CTOS Digital Bhd was a standout as it leveraged the digitalisation trend and has exposure to the fintech segment.
New Straits Times
2 days ago
- Business
- New Straits Times
Malaysia poised to benefit from US-China tech decoupling
KUALA LUMPUR: Malaysia's technology sector is well-positioned to benefit from ongoing United States-China trade tensions as global manufacturers seek to diversify their supply chains, according to RHB Investment Bank Bhd (RHB Research). The firm said the country's established semiconductor ecosystem, strong infrastructure and skilled talent base give it a competitive edge amid shifting production strategies, particularly under the "China Plus One" and "Taiwan Plus One" frameworks. "Malaysia stands to benefit from US-imposed tariffs via short-term rushed orders and long-term manufacturing reallocation activities," said analysts Lee Meng Horng and Miza Izaimi in a research note today. They said companies are increasingly mitigating geopolitical risks by relocating part of their operations to alternative locations in Asia, and Malaysia remains a top choice due to its track record and capacity. "The country's robust ecosystem, talent pool and infrastructure provide a competitive advantage," they added. RHB Research maintained a positive outlook for the technology sector despite near-term demand uncertainties stemming from excessive inventory build-up. It said the technology upcycle remains intact, with little evidence so far of major disruptions from global trade frictions. It also noted that Malaysia's position in the global semiconductor supply chain is expected to strengthen as multinational firms seek more resilient and diversified manufacturing bases. "The sector remains in an upcycle, showing minimal signs of major disruptions so far," the firm said. Despite macroeconomic uncertainties and ongoing trade challenges, RHB Research expects structural shifts in global supply chains to support Malaysia's long-term growth in high-tech manufacturing.
