VENTURE CORPORATION LIMITED (SGX:V03)
FRENCKEN GROUP LIMITED (SGX:E28)
FU YU CORPORATION LTD (SGX:F13)
Technology Sector - Numbers To Remain Robust In 2021; Still OVERWEIGHT
- Maintain OVERWEIGHT on sector. We remain bullish on the technology sector – especially the semiconductor space, which has done well this year. We believe the sector’s solid performance will continue in 2021.
- Meanwhile, the automotive sector is slowly recovering as well (as lockdowns resume across the world) – which should benefit many manufacturers.
- Top Picks: Frencken, Fu Yu, and Venture Corp.
Semiconductor demand growth to remain strong moving into 2021.
- According to SEMI, global sales of semiconductor manufacturing equipment by original equipment manufacturers should increase by 6% y-o-y to USD63.2bn in 2020, vs USD59.6bn in 2019. SEMI also expects the sector to log a record-high revenue of USD70bn in 2021, implying double-digit growth.
- Foundry and logic spending, accounting for about half of total wafer fabrication equipment sales, will see a single-digit sales increase in 2020-2021F.
- Spending on dynamic random access memory (DRAM) and NAND in 2020, which should surpass 2019 levels, is projected to grow by over 20% next year.
Twin growth drivers for Frencken Group (SGX:E28).
- Frencken's management remains upbeat that it will benefit from a key customer’s product in the industrial automation segment, of which the launch has been delayed to 2021.
- We remain bullish on its semiconductor segment, and Frencken should chart y-o-y earnings growth for this segment, despite a high base in FY20. The recovery in the automotive sector should continue to benefit its automotive revenue stream, and may be a growth catalyst in 2021.
- We expect FY21 to be a better year, and Frencken is expected to enjoy earnings growth of 12.5% y-o-y.
- See Frencken Group Share Price; Frencken Group Target Price; Frencken Group Analyst Reports; Frencken Group Dividend History; Frencken Group Announcements; Frencken Group Latest News.
Fu Yu (SGX:F13): Stable and resilient.
- With further new projects on the medical and consumer and automotive fronts, we expect its positive growth to continue from FY21 onwards. Despite a blip (ie a temporary drop in profits) caused by the COVID-19 pandemic, we expect Fu Yu’s strong net cash balance sheet to help it weather through challenges – as well as reward investors with attractive dividends.
- Fu Yu is also an attractive target for privatisation or acquisition.
- See Fu Yu Share Price; Fu Yu Target Price; Fu Yu Analyst Reports; Fu Yu Dividend History; Fu Yu Announcements; Fu Yu Latest News.
Better quarters ahead for Venture Corp (SGX:V03)
- We pegged Venture Corp to a 19x FY21F P/E, in order to reflect resilient margins and the stability it has over peers.
- Venture Corp's management expects to deliver a stronger 2H20 performance (on a h-o-h basis) – provided the COVID-19-induced lockdowns and disruptions do not deteriorate further. The company is now fulfilling its backlog of orders, while its research and development laboratories plan to release new products for the manufacturing segment, from early 2021 onwards.
- See Venture Corp Share Price; Venture Corp Target Price; Venture Corp Analyst Reports; Venture Corp Dividend History; Venture Corp Announcements; Venture Corp Latest News.
Jarick Seet
RHB Securities Research
|
https://www.rhbinvest.com.sg/
2020-11-27
SGX Stock
Analyst Report
22.600
SAME
22.600
1.220
SAME
1.220
0.300
SAME
0.300
