RHB Sector Update - Semiconductor

Sector Update

Semiconductor – Feb chip sales fell but gaining momentum                                                 Neutral

Sector Update

Unisem – Fair value is RM1.53 based on 1x forward FY12 P/BV                               Market Perform

MPI – Fair value is RM3.40 based on 1x forward CY12 P/BV                                     Market Perform

Notion Vtec – Fair value is RM2.14 based on 8x CY12 FD EPS                               Market Perform

-          Feb global chip sales of US$22.9bn were down 7.3% yoy, although this was slightly better than Jan’s decline of 8.8% yoy. Similarly, the mom sales decline of 1.3% was narrower vs. Jan’s decline of 2.7%, suggesting that the decline in chip demand has bottomed on the back of inventory replenishment and stronger wafer sales.

-          While there is still a lack of earnings visibility in the near term, we believe that the sector has reached the bottom in the current downturn. We thus reiterate our Neutral stance on the sector with a positive bias on the longer-term outlook.

Source: RHB Reserach - 4 April 2012