Excerpts from Maybank KE report
Analyst: Gene Lih Lai, CFA
AEM remains top pick on still robust outlook
|We marketed our views and updates of the impact of Covid-19 towards the Singapore Tech sector to more than 30 clients last week.
Clients were primarily interested towards the prospects of Venture (VMS) and AEM.
As risk-reward no longer appear attractive for VMS and Hi-P (HIP), we downgrade both to Sell from Hold with unchanged earnings and TP.
Key risk to our view on VMS and HIP are stronger than expected volumes in 2H20.
|Interest primarily towards AEM and VMS|
For VMS, clients were interested to understand longer-term prospects, as well as shorter-term disruptions.
For AEM, clients were keen to understand the underlying dynamics of the strong FY20 revenue outlook, and to gain colour on growth initiatives, such as with Huawei and the Hybrid test handler for Intel, both to be commercialized this year.
|Semiconductor equipment coverage updates|
On 16-Apr, AEM reiterated its FY20E revenue guidance of SGD360-380m, and updated that it is operating “without any material adverse impact” as a result of anti-Covid-19 measures implemented by governments globally.
UMS remains “cautiously optimistic” on the current outlook, and we continue to see UMS as a beneficiary of sustained logic/ foundry spending this year.
Despite acknowledging uncertainties due to Covid-19, TSMC (a key customer of Applied Materials, in turn UMS’ key customer) has affirmed its FY20 capex guidance of USD15-16b, as the spending caters to 2021 growth and beyond.
TSMC remains confident of “multiyear megatrends” of 5G and high performance computing applications.
VMS and HIP have risen 14%/20% in the last month.
Full report here.