Cautiously Optimistic
§ Worldwide sales remain lackluster: recorded seventh consecutive yoy growth contraction with -8.8% reaching USD23.18bn (3 months moving averages) in January 2012.
§ Slightly optimistic outlook:
WSTS foresees the market to grow only at 2.6% and 5.8% in 2012 and 2013
respectively, vis-à-vis to the double-digit growth experienced in 2007
and 2009.
§ Highly correlated: MPI and Unisem’s 2012 and 2013 revenue growth will be dictated by the underlying worldwide semiconductor growth trend.
§ Electronics demand: subdued
demand in IT/PC markets due to depressed consumer confident as the
result of European debt crisis will be offset by better outlook in both
telecommunication and automotive industries.
§ Telco market: main
catalyst to the recovery of the industry as cellcos leapfrog into
4G/LTE standard and proliferation of smartphones (especially low-cost
models) and tablets.
§ Auto market: Higher production of hybrid and electric cars will spur the industry as more IC components are required.
§ We
believe that Moore’s Law will continue to spur growth coupled with
potential growth in the electronics market. Hence, we expect Malaysian
semiconductor packagers to experience moderate growth in 2012.
§ However,
the growth would be dwarfed by intense competition from Taiwanese
peers, higher input costs and appreciation of MYR against USD along with
challenging economic outlook which will eventually hampers consumer
confident.
§ While
the sector is not expected to revisit the glory days of double-digit
growth as in 2007 and 2009, we initiate coverage on the sector with a
Neutral rating:
MPI (Hold; TP: RM3.57)
Unisem (Hold; TP: RM1.48)
