Excerpts from RHB Research report

Analysts: Jarick Seet & Lee Cai Ling

Our approach has remained unchanged, focusing on key selection of stocks in this space which have sound fundamentals and balance sheet as well as good growth despite the ongoing trade war issues.

gohpengooi 11.17Silverlake Axis founder and executive chairman Goh Peng Ooi.
Youtube screenshot
Our Top Picks – Venture, Fu Yu and Silverlake – reported positive results and their share prices have also rallied since the start of the year.

While we explore new names which we consider laggards like Memtech and Frencken, maintain NEUTRAL on the sector.

♦ Positive news on trade deal lighting up the technology sector. Since US President Donald Trump initiated the possibility of a trade war against China and its other key deficit trading partners in Mar 2018, Singapore stocks, especially those in the manufacturing sector, have taken a significant hit.

However, since end-Jan 2019, there has been positive news on this front coming out from both parties as they have met and held talks during 1Q19 – Mr Trump has agreed to extend the 1 Mar trade deal truce deadline, citing positive progress in trade talks.

Both parties have also expressed optimism towards a trade deal in front of the media, which improved market sentiment generally, mostly tech stocks, as the market seems to be positioning for a trade deal by end Mar 2019.

♦ Still sticking to bottom up approach. While we do note that sentiment has improved generally among most technology stocks, we still prefer to stick to the bottom up approach for stock selection in this space.

We focus on companies with sound fundamentals and decent growth, as we feel these stocks will continue to rerate as they deliver their results.

We do note that not all technology share prices have rallied – some have even derailed due to negative earnings, or a slowdown due to loss of projects, or cut in orders by their customers, like Sunningdale Tech (SUNN SP, NR) and Valuetronics (downgraded after its recent results).

The semi-conductor sector remains weak across the whole supply chain, with orders still recovering at a slow pace.

As such, our Top 3 picks remain unchanged, namely Venture Corp, Fu Yu Corp and Silverlaks Axis, as we continue to see potential positive earnings growth momentum into 1Q19.

On the sector, we maintain NEUTRAL, as there is no certainty that a trade deal can be met, which would be detrimental to sentiment among stocks in this space, if otherwise.

JarickSeet3.18Jarick Seet♦ Looking into laggards with sound fundamentals. We continue to explore the sector and try to identify stocks which have not yet been rerated or rerated less than its peers in the tech space, ie laggards.

We believe these stocks might rerate as they deliver earnings growth going forward, coupled with further positive news on the US-China trade deal.

These include Frencken (FRKN SP, NR) and Memtech International (MTEC SP, NR) which we do not have coverage at the moment.

Memtech outside6.15Memtech: In 2019, has new projects and boost from major projects delayed in 2018. Photo: Company

Full report here.

You may also be interested in:

You have no rights to post comments

Counter NameLastChange
AEM Holdings3.310-0.040
Avi-Tech Electronics0.255-
Best World1.660-0.010
Broadway Ind0.075-
China Sunsine0.4050.005
Delfi Limited1.240-0.030
Food Empire1.1000.040
Fortress Minerals0.335-
Geo Energy Res0.225-
GSS Energy0.033-
Hong Leong Finance2.490-0.010
Hongkong Land (USD)3.410-0.090
ISDN Holdings0.380-0.010
IX Biopharma0.045-0.005
Jiutian Chemical0.031-0.001
KSH Holdings0.315-
Leader Env0.070-0.002
Medtecs Intl0.142-0.006
Nordic Group0.415-
Oxley Holdings0.105-0.002
REX International0.187-0.013
Sinostar PEC0.140-
Southern Alliance Mining0.6900.020
Straco Corp.0.440-
Sunpower Group0.295-
The Trendlines0.095-
Totm Technologies0.047-0.001
Uni-Asia Group0.950-
Wilmar Intl3.690-0.040
Yangzijiang Shipbldg1.7400.070

We have 1458 guests and no members online

rss_2 NextInsight - Latest News