Technology stocks continue to rise
Counters recover from recent sell-down
PETALING JAYA: Technology stocks on Bursa Malaysia have been advancing since early May, despite weakness in the broader market.
Semiconductor manufacturers such as Malaysian Pacific Industries Bhd, Unisem (M) Bhd and Pentamaster Corp Bhd have been on a steady rise following a selldown in the counters.
Unisem saw a sharp drop in its share price in end-April, following a plunge in net profit for the first quarter ended March 31, due to a weaker US dollar against the ringgit.
Additionally, the rally in the counters was driven by the US’ technology stocks, which rebounded with Nasdaq rising to historical close last Thursday.
Counters such as Facebook also reached historical highs, with Netflix and Alphabet contributing to the index’s advance.
Back home, aside from the semiconductor manufacturers, payment solution provider GHL Systems Bhd has been gaining traction, following its announcement to acquire another payment solutions company Paysys Communications Sdn Bhd for RM80mil.
The plan has prompted CIMB Research to upgrade GHL System to “add” as the Paysys acquisition will expand GHL’s distribution network.
Among the technology counters on Bursa Malaysia, Maybank IB Research suggested Inari Amertron Bhd as the “sector bellwether”.
“At 18 times calendar year 2019 price-earnings ratio, valuations are still undemanding for a growth stock offering 30% three-year earnings compounded annual growth rate,” it said in a recent report.
The research house reckoned that the consensus estimate has yet to price in Inari’s aggressive floor space expansion. “With the imminent commissioning of Inari’s new plants and component wins announced recently, we believe an earnings upgrade by consensus is forthcoming,” Maybank IB said.
Meanwhile, the local equities market tracked by the FBM KLCI index has been on a roller coaster ride, as trade war between the world’s two largest economies intensified.
In addition, the market is also adjusting to the new government under Pakatan Harapan.
The benchmark 30-stock index was down 8.6% since early May, while the Bursa Malaysia Technology Index gained 19%.
Year-to-date, FBM KLCI has declined by 4.85%. “The market is expected to remain volatile this year, which would put investors in a wait-and-see position until the (outlook) clears,” said an analyst.