Sie sind auf Seite 1von 5

PP 7767/09/2010(025354)

18 March 2010

Malaysia Corporate Highlights


RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Sector Upda te
18 March 2010
MARKET DATELINE

Recom : Overweight
Semiconductor (Maintained)

Turning Stronger In 2010

Table 1 : Semiconductor Sector Valuations


EPS EPS growth PER P/NTA P/CF GDY
FYE Price FV (sen) (%) (x) (x) (x) (%) Rec
(RM/s) (RM/s) FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
Unisem Dec 2.38 3.07 20.5 31.0 77.6 51.5 11.6 7.7 1.4 4.4 2.1 OP
MPI* Jun 6.59 8.15 42.6 66.0 700.2 54.9 12.6 8.1 1.9 4.1 7.9 OP
Notion Vtec Sep 3.25 4.59 33.4 45.9 30.4 37.5 9.2 6.7 2.3 6.5 2.1 OP
Sector Avg 65.8 50.1 12.4 8.3

* FY09 & FY10 Chart 1. Semiconductor


Capital Equipment Trend
♦ Stronger silicon wafer demand ahead. Already, Gartner expects 2010
silicon wafer demand to increase 29.5% yoy (vs. -18% yoy in 2009) largely $2,500.0

$2,000.0
due to production ramp-up by major foundries to replenish the low-

US$mil
$1,500.0
inventory level plus anticipation of higher chips demand ahead. $1,000.0


$500.0
Outlook for key product segments. While 2010 global chip sales growth $0.0

will be driven mainly by consumer electronics, we highlight three key

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09
product segments i.e. smart phones, mobile PCs and tablets. We believe the Bookings (3mma) Billings (3mma)

general theme for new product features going forward would include smaller
form factor and lower ownership cost as well as greater wireless Source:Semi
compatibility.

♦ Equipment orders outlook for 2010. Given the sharp pull-back in capex Chart 2. Global Chip Sales vs Book To
Bill
spending in 2009 (-45% yoy) as well as stronger chips demand ahead, we
expect capex spending to increase significantly over the next two years. 1.4 60.0%

Global sales yoy (RHS), %

Already, Jan 10 equipment bookings were 3.5x higher than the 12-year low
50.0%
1.2
book to bill (LHS), x
40.0%

of US$247m in Mar 09. We highlight that key drivers for a stronger capex
1.0
30.0%

20.0%

spending in 2010 would be increase in foundry capex spending as well as


0.8

% yoy
Ratio

10.0%

0.6

higher spending in manufacturing equipment.


0.0%

0.4 -10.0%

-20.0%


0.2

Chip players moving to higher-margin products. In 2010, we believe


-30.0%

0.0 -40.0%
Jan-03
Mar-03
May-03
Jul-03
Sep-03
Nov-03
Jan-04

Mar-04
May-04
Jul-04
Sep-04
Nov-04
Jan-05
Mar-05
May-05
Jul-05
Sep-05
Nov-05
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
chip players would likely focus on specific segments in which they have Jan-10

Source: SIA
technological advantage to improve its profit margins. We are positive on
the latest development as this would benefit chip assemblers as margins for
Unisem and MPI would likely remain resilient, supported by its customers’
higher-margin products.

♦ Risks. 1) Slower-than-expected economic recovery dampening demand for


equipment and consumer electronics; 2) strengthening of RM against US$;
and 3) higher raw material cost.

♦ Investment case. We believe the semiconductor sector is poised for a


stronger recovery in 2010 given stronger outlook for key product segments
(i.e. mobile PCs, smart phones and LCD tablets) as well as new electronic
gadgets/applications, as these will drive chips demand going forward.
Hence, against the backdrop of improved earnings visibility and stronger
chip sales in 2010, we are reiterating our Overweight stance on the sector.
Our top pick for the sector is Unisem.
Wong Chin Wai
(603) 92802158
Please read important disclosures at the end of this report.
wong.chin.wai@rhb.com.my

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 1 of 5
available for download from www.rhbinvest.com
18 March 2010

♦ Stronger silicon wafer demand ahead. Already, Gartner expects 2010 silicon wafer demand to increase
29.5% yoy (vs. -18% yoy in 2009) largely due to production ramp-up by major foundries to replenish the low-
inventory level plus anticipation of higher chips demand ahead. We believe the risk of rising excess inventory
level is low as chip producers are still running tight inventory despite the stronger outlook for chips demand.

♦ Outlook for key product segments. While 2010 global chip sales growth will be driven mainly by consumer
electronics, we highlight three key product segments i.e. smart phones, mobile PCs and tablets. We believe the
general theme for new product features going forward would include smaller form factor and lower ownership
cost as well as greater wireless compatibility.

1) Smart phones. According to US Consumer Electronics Association (CEA), smart phones total unit shipments
is expected to increase to 235m in 2010 (vs. 174.2m in 2009) driven mainly by: 1) greater affordability
stemming from emergence of entry-level smart phones; 2) strong demand for web based phones; and 3)
increasing trend towards wireless compatibility. Volume growth coupled with higher chips density for smart
phones (given its wireless and touchscreen capability) will drive global chips demand in 2010-11, in our
view.

2) Mobile PCs. The mobile PCs remain the main driver for the PC segment due to strong demand from
emerging markets (i.e. China and India) and roll-out of cheaper notebooks (based on new ultra-low-voltage
technology). In addition, the corporate IT spending in 2010 would likely gather momentum, driven by on-
going replacement cycle (i.e. Windows 7) as well as growth in network capacity. In tandem, Gartner revised
upwards 2010 PC unit shipments growth forecast to 20% (vs. 10% previously). As PC products contribute
25-30% to the chip sales, we expect these to support chips growth in 2010.

3) Tablets. We expect stronger demand ahead for tablets (such as iPad) given growing emphasis on mobility
as well as convergence of computing and communication. Gartner expects 2010 total shipments for tablets
to reach 10.5m and would rise significantly in 2011-12 on account of roll-out of tablets by other CE
(consumer electronics) manufacturers.

♦ Equipment orders outlook for 2010. Given the sharp pull-back in capex spending in 2009 (-45% yoy) as well
as stronger chips demand ahead, we expect capex spending to increase significantly over the next two years.
Already, Jan 10 equipment bookings were 3.5x higher than the 12-year low of US$247m in Mar 09. With a book-
to-bill ratio of 1.20, Jan 10 was the seventh consecutive month with a book-to-bill ratio of above one suggesting
resilient growth in capex trend beginning Jul-09. In tandem, SEMI expects chip suppliers to increase their capex
spending by 45-60% yoy in 2010, spurred by higher IC demand and capacity constraint in major chip segments
(i.e. memory and logic). We highlight that key drivers for a stronger capex spending in 2010 would be:

1) Increase in fab spending. We have highlighted that 2010 foundry capex spending is expected to rise
against the backdrop of increased process migration for the memory segment as well as ramp-up in the
300-mm wafer capacity. Note that this project has been postponed due to the economic downturn beginning
4Q 2008. In tandem, SEMI raised 2010 worldwide fab spending forecasts to 88% (vs. 60% previously). In
addition, note that TSMC and UMC have raised 2010 capex guidance to US$4.8bn and US$1.2-1.5bn (from
US$2.7bn and US$1bn previously) against the backdrop of stronger chips demand and technological
advancement (i.e. migration to node <65nm).

2) Spending on manufacturing equipment. In the same vein, global spending on other semiconductor
manufacturing equipment (i.e. back-end equipment) is expected to rise by 45-55% yoy in 2010 after
registering a three-year decline. Recall that Samsung, Intel, and Micron are in expansion mode with plans to
spend US$6.8bn, US$4.8bn and at US$2.5bn respectively in 2010 (vs. US$4.6bn, US$4.5bn and US$1.5bn
in 2009).

♦ Chip players moving to higher-margin products. In 2010, we believe chip players would likely focus on
specific segments in which they have technological advantage to improve its profit margins. We understand
that Infineon Technologies AG is moving away from the memory and communication market to focus on its
higher-margin core businesses such as system-level IC and industrial electronics. On the same token,
STMicroelectronics N.V, NXP Semiconductor and Freescale Semiconductor are streamlining its product line to
focus on higher-value power management as well as automotive chips. Already, we note that operating margin
for semiconductor suppliers have started to improve beginning 2Q09 before reaching its 7-year high of 21.4%

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 2 of 5
available for download from www.rhbinvest.com
18 March 2010

in 4Q09 (see Chart 2). We are positive on the latest development as this would benefit chip assemblers as
margins for Unisem and MPI would likely remain resilient supported by its customers’ higher-margin products.

Chart 3: Global Operating Project Margins For Semiconductor Suppliers

35
30
25
20
15
10
5
0
-5
00

00

01

01

02

02

03

03

04

04

05

05

06

06

07

07

08

08

09

09
1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q

1Q

3Q
-10
-15
-20

Source: i-Suppli

♦ Utilisation rates to increase in 2010. According to iSuppli, semiconductor utilisation rates are expected to
rise in 2010 driven mainly by slower-than-expected capacity ramp-up by chip players. Already, Unisem expects
overall 1QFY12/-10 utilisation rate to be higher at 75% (vs. 70% in 4QFY12/10) on account of stronger-than-
expected demand for technology-based products from emerging markets. Similarly, MPI’s current utilisation
rates for its Ipoh, Suzhou and Dynacraft plants stand at 60%, 80% and 65% respectively (vs. 35%, 40%, 35%
in 3QFY06/09) given stronger chips demand arising from the pick-up in consumer electronics (i.e. handphones
and netbook computers) as well as China’s investment in its 3G infrastructure. In tandem, major chip suppliers
(i.e. TSMC, UMC, ASE and SPIL) have recently announced plans in increasing its headcount to beef up its
production capacity.

Valuations And Recommendation

♦ Unisem riding on Chengdu’s growth. Management expects FY10 revenue contribution from Unisem Chengdu
to increase to 35% before rising to >50% in FY11 (from 20% in FY09), driven mainly by: 1) stronger-than-
expected chips demand arising from festive season sales (i.e. CNY) from China; and 2) still resilient demand for
wireless and networking chips driven by China’s stimulus package. The company expects Chengdu’s FY10
earnings to double on the back of higher capacity (i.e. rising QFN capacity) and margin expansion (due to
stronger contribution from higher ASP packages). Hence, against the backdrop of improved earnings visibility
and stronger-than-expected chip sales in 1Q10 and extending into 2Q10, we are reiterating our Outperform call
on the stock with an unchanged fair value of RM3.07/share.

♦ Capacity expansion and roll-out of new packages in Suzhou. We believe MPI’s medium-term earnings
visibility remains bright given still-resilient chips demand from China. Further-out, we highlight that earnings
growth would be driven by stronger chips demand from US and Europe as well as margin expansion stemming
from higher contribution of high-density packages and module packages. Hence, we maintain our Outperform
call with fair value of RM8.15/share which is based on unchanged 15x CY10 PER.

♦ Banking on Nikon and Samsung’s growth. We believe Notion’s earnings will be driven mainly by: 1)
stronger demand in the 2.5’’ HDD segment particularly the robust orders from Samsung; and 2) stronger
contribution from its camera division given volume loading from Nikon. We expect margins to remain stable,
supported by 1) stronger contribution of higher-margin camera segment; 2) stable HDD ASP; and 3) cost-
cutting measures via efficient in-house tooling capability. Given the strong demand outlook for all the business
segments, we maintain our Outperform call with an indicative fair value of RM4.59/share which is based on
unchanged 10x FY11 PER..

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 3 of 5
available for download from www.rhbinvest.com
18 March 2010

♦ Reiterate Overweight. We believe the semiconductor sector is poised for a stronger recovery in 2010 given
stronger outlook for key product segments (i.e. mobile PCs, smart phones and LCD tablets) as well as new
electronic gadgets/applications, as these will drive chips demand going forward. Hence, against the backdrop of
improved earnings visibility and stronger chip sales in 2010, we are reiterating our Overweight stance on the
sector. Our top pick for the sector is Unisem.

Chart 4: MPI Technical View Point


♦ MPI’s share price broke out from the four-month
old consolidation below the RM5.47 level in early
Jan 2010.

♦ The stock shot up to an almost two-year high of


RM7.50 by mid-Jan, but encountered a strong
profit-taking force, pressing it back to the support
region near RM6.15 in Feb 2010.

♦ The stock recently rebounded from the RM6.15


region, and tested the resistance at RM6.82.

♦ However, it pulled back towards the 40-day SMA


near RM6.50 region of late.

♦ But, with a “doji” candle registered on the chart,


and the mixed momentum readings, the selling
momentum has evidently reduced.

♦ This indicates a likely reappearance of bargain-


hunting activities near the 40-day SMA of RM6.47
soon, and hence a chance for a further rebound to
above RM6.82, and to retest the RM7.50 high.

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law.
The opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may
differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not
to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein
in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated
persons may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or
more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take
on higher risks.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 4 of 5
available for download from www.rhbinvest.com
18 March 2010

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for
the actions of third parties in this respect.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for
the actions of third parties in this respect.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 5 of 5
available for download from www.rhbinvest.com

Das könnte Ihnen auch gefallen