Excerpts from CGS-CIMB report
Analyst: William Tng, CFA
■ World Semiconductor Trade Statistics (WSTS) projects CY22F global semicon revenue growth of 25.1% and a still strong 10.1% for CY23F.
■ AEM (Add, TP S$4.78) and UMS (Add, TP S$1.97) are beneficiaries.
Global semicon sales continued to grow into Jul 2021
● The Semiconductor Industry Association (SIA) announced that global semiconductor industry sales were US$45.4bn in Jul 2021 (Jul 2020: US$35.2bn), up 29.0% yoy. ● Quarter-on-quarter, global semiconductor sales rose 2.1% (Jun 2021: US$44.5bn).
● According to SIA, global semiconductor sales strength in July was driven by robust demand across all major regional markets and semiconductor product categories with chip production and shipments reaching all-time highs in recent months as the industry worked to address sustained high demand. WSTS lifts its projections
● The World Semiconductor Trade Statistics (WSTS) updated its global semiconductor sales forecast on 16 Aug 2021. ● CY22F sales are expected to grow 25.1% yoy (previously 19.7%) to US$550.9bn (previously US$527.2bn).
● Although growth will slow from the high base of CY22F, CY23F sales is still expected to climb 10.1% yoy to US$606.5bn (previous expectation was 8.8% growth to US$573.4bn).
|AEM (Add, TP S$4.78)|
● AEM has completed its new share placement to a unit of Temasek Holdings, which is now the largest shareholder with an 8.68% stake. AEM has also recently announced a new undisclosed memory customer.
● We see earnings upside risks to our FY22F forecasts from possible accretive acquisitions and further new customer wins.
● Potential re-rating catalysts are upward revisions to revenue guidance in the coming months and further new customer wins.
● Downside risks are delivery delays due to lockdowns/movement restriction extensions and aggressive competitive responses from its competitors.
|UMS (Add, TP S$1.97)|
● In its recent 2Q21 results announcement, UMS rewarded shareholders with an unchanged DPS of 1.0 Scts and a special 1-for-4 bonus issue, its third bonus issue since Jun 2014.
● With the stronger earnings outlook over FY21F-23F, we see UMS reverting to its historical 6 Scts DPS, leading to projected 3.53% dividend yields over FY21F-23F.
● Potential re-rating catalysts include stronger-than-expected orders for its semiconductor business, new customer wins and faster-than-expected earnings recovery for JEP Holdings Ltd (JEP SP, NR).
● A key risk is operational disruptions arising from potential Covid-19 cases at its Malaysian factory.
Full report here.