Semicon players bullish on strong demand from automotive segment beyond 2022

11 Apr 2022

Malaysian semiconductor (semicon) players are bullish on demand and sales growth in the automotive segment beyond 2022, underpinned by structural shifts towards electric vehicles, advanced driver assistance system, safety and connectivity.

In a note on April 11, CGS-CIMB Securities Sdn Bhd said this was in spite of near-term challenges from prolonged supply chain disruptions, lack of human capital and longer equipment lead times.

“Nevertheless, we expect margins to remain fairly stable despite rising costs as the structural shift towards a higher margin portfolio and advanced packages will help to alleviate inflationary cost pressures,” it said.

The stockbroking firm projected core net profit growth for Malaysian outsource semiconductor assembly and test (OSAT) sector to be at 21%, and the automated test equipment (ATE) sector at 24% this year.

“We think Malaysian ATE offers better value at this juncture, given that the sector trades at 27.9 times 2022 forecast price-to-earnings ratio (P/E), nearly one standard deviation (SD) below the three-year sector mean of 34 times,

“While Malaysian OSAT trades at 22.7 times 2022F, which is broadly in line with its mean P/E,” it said.

Overall, CGS-CIMB has maintained its “overweight” rating on the semicon sector.

Source: Bernama