The following posting by Kevin Scully, executive chairman of NRA Capital, was made on his blog this morning and is reproduced here with permission. Visit www.nracapital.com


Image SINGAPORE'S April 2010 industrial production data expanded strongly by 51% year on year and 31% year on year excluding bio-medical.

What is more interesting to me is the breakdown of the electronics segment because this sector has a strong weighting in my Stock Picks at about 50%. Looking into the data close I note the following:

a) the electronics sector grew 60% year on year in April 2010.

b) within the electronics segment - semi-conductor equipment expanded by 98.7% - this strong growth is consistent with the strong profit of some tech companies exposed to the semi-conductor equipment segment. 

Image
NRA Capital's forecast of Hisaka's performance.

Two recent inclusions in my Stock Picks which are in the semi-conductor equipment market are ASTI and Hisaka - they both delivered very strong Q1-2010 and H1-2010 results. 

Other stocks/companies which have exposure in this sector which we cover or have visited recently include MIT and UMS. 

All have confirmed very strong orders into Q2-2010 and are expecting a good 2010 - with visibility up to the end of the year.

c) the next strong growth section in the electronics is component and modules - which grew 34.1% in April 2010.

This data reinforces my view that semi-conductor equipment companies are likely to surprise on the upside in terms of earnings for 2010 and are also on low PER valuations.  The current market weakness/correction provides a good buying opportunity into the sector for those prepared to take a six-month view.


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SEMICON STOCKS, BREADTALK : What analysts now say...


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