Kenanga Research maintains ‘neutral’ call on technology sector despite improvements

KUALA LUMPUR: Kenanga Research has maintained its ‘ neutral’ call on the technology sector although modest improvements continued to be seen in global semiconductor sales and Semi’s (Semiconductor Equipment and Materials International) book to bill ratio.

“We understand that the recovery will only be reflected in the local companies in three to six months’ time,” it said in a note yesterday.

It said the latest global semiconductor sales in March inched up by 0.9 per cent year on year (y- o-y) as the decent growth contributed by the Asia Pacific (an increase of 6.9 per cent) and Europe (an increase of 0.7 per cent) segments was somewhat erased by a sharp decline in

We understand that the recovery will only be reflected in the local companies in three to six months’ time. Kenanga Research

Japan (a decline 18 per cent) and Americas segments (a decline of 1.5 per cent).

On a month on month comparison, it said global semiconductor sales in March 2013 grew by 1.1 per cent from its low base in February.

On a separate measure, the research house said the book to bill ratio for North Americabased semiconductor equipment manufacturers came in higher at 1.14 times in March against 1.10 times in February.

It said although the ratio remained above the one-time parity which indicated a stronger demand, a y- o-y comparison basis in terms of absolute bookings and billings numbers still suggest that both orders and billings remained relatively soft, likely due to the pressure of a frail global economic condition.

“We are reiterating our earlier conviction that any lights at the end of the tunnel could only be seen in the second half of 2013 on the back of a catch-up in global chip demand amid a possible better global economic condition then,” it added. — Bernama