A boring weekend and sharing a simple post. My thoughts on 2023 and Beyond.

The first half of 2023 has been great for the US market, but not so much for the Malaysian market. These are just some personal thoughts on the matter:
1. Investors, especially foreign investors, still have concerns about the stability of the current government and the potential impact of the upcoming state election in August.
2. After nine months, we haven't seen significant policies that can effectively stimulate our economy yet
3. Poor economic data is negatively affecting our currency, the ringgit. However, it's interesting to note that we have seen an increase in Foreign Direct Investment (FDI) from 54 billion to 84 billion in Q1 of 2023. We should delve into the economic interpretation of this data in another discussion. If the FDI continues to hold, improves the current account, and reduces the trade deficit, we may see a reversal of the situation. Personally, I believe we may experience a rebound after the election.

That being said, personally, I believe the following sectors show promise moving forward when our local market (KLCI) catch up with our regional markets in the 2h of 2023:
1. Semiconductor Sector: I have been closely tracking global semiconductor sales, and they have experienced a consecutive decline for 14 months until May 2023 when they finally started to tick up. Typically, the downtrend cycle for the past 15 to 20 years has lasted around 15 to 20 months, and the subsequent uptrend is usually of a similar duration. Therefore, we may be only a quarter away from reaching the peak of the overall semiconductor sector's downtrend. However, it's important to note that this analysis is based on an overall basis and does not delve into individual sub-sectors such as memory and logic. Currently, the decline in the semiconductor sector can be attributed to memory chips.

Personally, liking $UNISEM / 5005 (UNISEM (M) BERHAD) $MI / 5286 (MI TECHNOVATION BERHAD) and AEM Holdings (SG). Sharing two charts that need no further elaboration. One thing for sure is that, there has been lacking of investment in the OSAT sector for the past 10 years and Unisem has doubled their capacity (which if everything goes well, we may see the revenue and profit doubling as well). MI wise, whats interesting is more on the material segment rather than equipment segment. If semiconductor were to rebound, the front-end, material and osat will start to rebound first before the equipment segments.

$ELSOFT / 0090 (ELSOFT RESEARCH BERHAD) , Elsoft is indeed quite interesting, especially considering their track record and the availability of their recently developed medical devices that are currently undergoing the "testing" phase. One notable aspect is that during the favorable period of 2018, their Gross Margin was around 58%, which is on par with Vitrox. It's intriguing to imagine the potential if Elsoft can turn around and reach their peak performance. Despite not being profitable, they have consistently generated high-quality Free Cash Flow (different from normal FCF) over the past 10 years..

2. Turnaround - Not a conventional pick, but given some good pick that @Ryunanda has gotten it right for RGB international, thought to share some potential turnaround companies. One that i am watching KLSE-RGTBHD and $ASIAPLY / 0105 (ASIA POLY HOLDINGS BERHAD). RGT Berhad acquisition of Topdegree is interesting (involved in precision of test sockets) and Asiapoly recent expansion coupled with slowing down of freight cost, worth watching.

3. Value - Personally this may sound boring but liking KLSE-ULICORP , $BJFOOD / 5196 (BERJAYA FOOD BERHAD) KLSE-INNATURE . Personally, was initially skeptical when examining BJFood, but after reviewing the numbers, I find it quite intriguing. They have managed to generate a significant amount of Free Cash Flow (FCF), with a reported 240 million in 2022. This translates to an FCF margin of 24%, which is impressive. Additionally, the price-to-FCF ratio is only 5.

Moving on to Ulicorp, it is known for its slow and reputable management. Despite their conservative approach, they offer a solid 5% dividend yield. Furthermore, the company has a net cash position of 50 cents per share, while currently trading at 0.96 cents.

Sharing my short thoughts for everyone. Good day.