TECHNOLOGY
 $KLSE-D&O [%zqix%] [%FTzB%] [%JqaN%] [%cAZZ%] 
Research by Kenanga
Neutral

“4QCY23 Report Card: Seasonality and Cyclical Uptick”

The sector’s earnings delivery (against our expectations) improved in the recently concluded 4QCY23 reporting season sequentially on the back of a combination of seasonality and potentially the start of a cyclical upturn. D&O (MP; TP: RM3.60) reported its highest quarterly revenue and a 33% QoQ jump in net profit driven by restocking by its Chinese clients. PIE (OP; TP: RM4.00) reported improved orders across the board while KGB (OP; TP: RM3.40) delivered another record-breaking number on robust project deliveries and improved margins. Keeping in mind seasonality in 4QFY23 numbers, we advocate investors to cherry-pick proven names such as: (i) KGB for its strong earnings visibility backed by a RM1.3b order book, (ii) INARI (OP; TP: RM4.05) on its growing its exposure to China smartphone and AI-fuelled data centre boom, and (iii) PIE for its strong earnings growth trajectory that is driven by a wide range of customers. 

Analyst(s):
Samuel Tan 
[%lvBo%]

TECHNOLOGY
 $KLSE-D&O $KLSE-KGB $KLSE-INARI $KLSE-PIE $KLSE-UNISEM 
Research by Kenanga
Neutral

“4QCY23 Report Card: Seasonality and Cyclical Uptick”

The sector’s earnings delivery (against our expectations) improved in the recently concluded 4QCY23 reporting season sequentially on the back of a combination of seasonality and potentially the start of a cyclical upturn. D&O (MP; TP: RM3.60) reported its highest quarterly revenue and a 33% QoQ jump in net profit driven by restocking by its Chinese clients. PIE (OP; TP: RM4.00) reported improved orders across the board while KGB (OP; TP: RM3.40) delivered another record-breaking number on robust project deliveries and improved margins. Keeping in mind seasonality in 4QFY23 numbers, we advocate investors to cherry-pick proven names such as: (i) KGB for its strong earnings visibility backed by a RM1.3b order book, (ii) INARI (OP; TP: RM4.05) on its growing its exposure to China smartphone and AI-fuelled data centre boom, and (iii) PIE for its strong earnings growth trajectory that is driven by a wide range of customers. 

Analyst(s):
Samuel Tan 
samueltan@kenanga.com.my