AEM HOLDINGS LTD (SGX:AWX)
UMS HOLDINGS LIMITED (SGX:558)
FRENCKEN GROUP LIMITED (SGX:E28)
Semiconductor - 2022 Semicon Outlook Still Strong
- Semiconductor Industry Association (SIA) announced global semicon sales grew 29.0% y-o-y and 2.1% m-o-m for Jul 2021.
- World Semiconductor Trade Statistics (WSTS) projects CY22F global semicon revenue growth of 25.1% and a still strong 10.1% for CY23F.
- AEM (ADD, target price S$4.78) and UMS (ADD, target price 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% y-o-y.
- 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.
World Semiconductor Trade Statistics (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% y-o-y (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% y-o-y to US$606.5bn (previous expectation was 8.8% growth to US$573.4bn).
AEM (SGX:AWX) (ADD, target price 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 for AEM are upward revisions to revenue guidance in the coming months and further new customer wins.
- Downside risks for AEM are delivery delays due to lockdowns/movement restriction extensions and aggressive competitive responses from its competitors.
UMS (SGX:558) (ADD, target price S$1.97)
- In its recent 2Q21 results announcement, UMS rewarded shareholders with an unchanged dividend of S$0.01 per share 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 S$0.06 dividend per share, leading to projected 3.53% dividend yields over FY21F-23F.
- Potential re-rating catalysts for UMS include stronger-than-expected orders for its semiconductor business, new customer wins and faster-than-expected earnings recovery for JEP (SGX:1J4).
- A key risk for UMS is operational disruptions arising from potential COVID-19 cases at its Malaysian factory.
William TNG CFA
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-09-06
SGX Stock
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SAME
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