TECHNOLOGY
 [%LxJM%] [%Xyzh%] [%Swhy%] 
Research by Kenanga
Overweight

“Dawn of a New Upcycle”

We maintain OVERWEIGHT on the technology sector. World Semiconductor Trade Statistics (WSTS) recently raised its projection for global semiconductor sales in CY24 to +16% (from +13.1%) driven by strong demand for memory and logic ICs. Following six consecutive months of YoY growth in semiconductor sales (Nov 2023 to Apr 2024), Malaysian players—which are mostly at the back end—are beginning to feel the positive impact. They guided for improving order visibility in coming quarters, which is consistent with our view of a recovery in 2HCY24. Our top picks are: (i) INARI (OP; TP: RM4.60) for its growing presence in China’s smartphone market and the AI space, (ii) KGB (OP; TP: RM4.10) for its strong earnings visibility backed by a RM1.3b order book, and (iii) LGMS (OP; TP: RM1.90) on higher demand for cybersecurity services from corporations locally on the heels of the enactment of Cybersecurity Bill 2024.

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

TECHNOLOGY
 $KLSE-INARI $KLSE-KGB $KLSE-LGMS 
Research by Kenanga
Overweight

“Dawn of a New Upcycle”

We maintain OVERWEIGHT on the technology sector. World Semiconductor Trade Statistics (WSTS) recently raised its projection for global semiconductor sales in CY24 to +16% (from +13.1%) driven by strong demand for memory and logic ICs. Following six consecutive months of YoY growth in semiconductor sales (Nov 2023 to Apr 2024), Malaysian players—which are mostly at the back end—are beginning to feel the positive impact. They guided for improving order visibility in coming quarters, which is consistent with our view of a recovery in 2HCY24. Our top picks are: (i) INARI (OP; TP: RM4.60) for its growing presence in China’s smartphone market and the AI space, (ii) KGB (OP; TP: RM4.10) for its strong earnings visibility backed by a RM1.3b order book, and (iii) LGMS (OP; TP: RM1.90) on higher demand for cybersecurity services from corporations locally on the heels of the enactment of Cybersecurity Bill 2024.

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