Singapore Technology Stocks - Maybank Kim Eng 2020-04-19: Malaysia Marketing Feedback; Downgrade Venture Corp Hi-P To SELL.

Singapore Technology Stocks - Maybank Kim Eng Research | SGinvestors.io AEM HOLDINGS LTD (SGX:AWX) VENTURE CORPORATION LIMITED (SGX:V03) HI-P INTERNATIONAL LIMITED (SGX:H17) UMS HOLDINGS LIMITED (SGX:558) VALUETRONICS HOLDINGS LIMITED (SGX:BN2)

Singapore Technology Stocks - Malaysia Marketing Feedback


AEM remains top pick on still robust outlook




Interest primarily towards AEM and Venture Corp

  • For AEM Holdings, 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.
  • For Venture Corp, clients were interested to understand longer-term prospects, as well as shorter-term disruptions.


Semiconductor equipment coverage updates


  • On 16-Apr, AEM Holdings 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. See AEM Holdings Announcements.
  • UMS Holdings (SGX:558) remains “cautiously optimistic” on the current outlook, and we continue to see UMS Holdings as a beneficiary of sustained logic/ foundry spending this year. See UMS Holdings Announcements. Despite acknowledging uncertainties due to Covid-19, TSMC (a key customer of Applied Materials, in turn UMS Holdings’s key customer) has affirmed its FY20 capex guidance of USD15-16b, as the spending caters to 2021 growth and beyond. TSMC remains confident of “multi-year megatrends” of 5G and high performance computing applications.


Downgrade Venture Corp and Hi-P to Sell on valuation grounds

  • Venture Corp and Hi-P International have risen 14%/20% in the last month. As we no longer see favourable risk-reward relative to the more cautious outlook outlined in “Singapore Technology Sector - Maybank Kim Eng 2020-03-29: Bracing For A Storm”, we downgrade Venture Corp and Hi-P International to SELL with unchanged ROE-g/COE-g Target Price of SGD13.90 (based on 1.5x FY20E P/B) and SGD0.78 (based on 1x FY20E P/B) respectively.
  • For Venture Corp, a key risk to our view is if corporate capex appetite remains resilient in 2H20, and that customers do not delay new product introductions. We remain constructive towards Venture Corp’s long-term prospects, but believe investors may have an opportunity to accumulate at more attractive valuations.
  • For Hi-P International, a key risk is if 2H20 volumes are stronger than expected, perhaps due to robust sales of the key wireless customers’ smartphones, notwithstanding weakening consumer sentiment globally.


Impact of COVID-19 to Singapore Technology Stocks






Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-04-19
SGX Stock Analyst Report BUY MAINTAIN BUY 2.820 SAME 2.820
SELL DOWNGRADE HOLD 13.900 SAME 13.900
SELL DOWNGRADE HOLD 0.780 SAME 0.780
BUY MAINTAIN BUY 0.960 SAME 0.960
BUY MAINTAIN BUY 0.820 SAME 0.820



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