Asia Pacific Equity Research05 September 2019 Notes from the Road: MY TechImpact of trade tensions - feedback from discussions with Malaysian Tech companiesASEAN TMTRanjan Sharma, CFA AC(65) 6882-1303ranjan.x.sharma@jpmorgan.comBloomberg JPMA RSHARMA J.P. Morgan Securities Singapore Private LimitedPranuj Shah(91-22) 6157-3035pranuj.shah@jpmorgan.comJ.P. Morgan India Private LimitedGokul Hariharan(852) 2800-8564gokul.hariharan@jpmorgan.comJ.P. Morgan Securities (Asia Pacific) LimitedHoy Kit Mak(60-3) 2718-0713hoykit.mak@jpmorgan.comJPMorgan Securities (Malaysia) Sdn. Bhd. (18146-X)See page 31 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.www.jpmorganmarkets.comFollowing our Big Data analysis indicating Malaysia as a supply chain shift beneficiary, we met five Malaysian tech companies to understand their business outlook and views on supply chain shifts. Companies are indicating a substantial jump in queries to increase production– one CEO recently hosted 80 corporates on a visit to Batu Kawan, Penang. Some companies have disclosed winning new customers (eg. VSI Industries, Pentamaster) while some companies have been negatively impacted but are still continuing investments (Unisem). The companies are selectively exposed to the 5G theme – Inari could be a major beneficiary. Big Data analysis shows Malaysia is amongst the biggest beneficiaries of supply chain shifts. Our Big Data analysis of supply chain shifts based on >4k transcripts indicates that: 1) SE Asia benefits over other regions from supply chain shifts; 2) Vietnam/Malaysia are the biggest beneficiaries in SE Asia; and3) SE Asia is seeing increased activity, but the bulk of relocation is yet to come. 1) Inari (N) could be a beneficiary of 5G; no new major customers yet. Block B of the Batu Kawan expansion has recently been qualified by Broadcom. Inari could be a major beneficiary of 5G adoption - JPM’s global tech team has recently raised the 5G smartphone shipment forecasts and now expect 200M 5G smartphones to ship in 2020. Opto segment remains a drag while new products/customers have not yet qualified for Block A/C of the Batu Kawan plant. We expect the earnings growth outlook to improve from 2HFY20. 2) VSI (Not Covered) recently signed a major customer; in discussions with more prospective customers. VSI has qualified for five product categories by a new customer in its new factory in Johor. VSI also has another new factory for which it is in active discussions with prospective customers. Consensus expectations are for FY18-21E NI growth of >30%. VSI is trading at FY20/FY21E P/E multiples of 14.0x/11.8x (based on Bloomberg consensus). 3) Pentamaster (Not Covered) has been recording strong revenue growth on strong demand for its automated test equipment and automation solutions. Pentamaster has established a new plant in Batu Kawan and has qualified a major Japanese customer for MLCCs. Pentamaster also discloses it has recently won business for test equipment for 5G infra chips from a Chinese vendor. Street expectations are for NI to grow 25% CAGR between FY18-21E. PENT MK is trading at FY20E P/E of 17.5x; 1665 HK is trading at FY20E P/E of 7.5x. 4) Globetronics (Not Covered) – limited expectations for supply chain shift related revenues. Revenues declined yoy in 1H19 and GTB anticipates recovery in 2H19 on increased sensor volumes. GTB has begun production of new light sensors from May-19 and is working on new gesture sensors. GTB is diversifying revenues with automotive lasers, gas sensors and power ICs. 5) Unisem (Not Covered) potentially negatively impacted by trade tensions; increasing investments. Unisem’s 1H19 revenues/NI declined 7.5%/~45%.Unisem capex is trending higher in 2019 possibly to pursue growth opportunities. Part of the investment is towards MEMS microphone business in Chengdu where they have been qualified by a European customer. Unisem claims to be in discussions with US RF customers and a Japanese customer to bring more production to Ipoh.2Asia Pacific Equity Research05 September 2019Ranjan Sharma, CFA(65) 6882-1303ranjan.x.sharma@jpmorgan.com Table of ContentsInari earnings growth outlook could improve from 2HFY20.....................................5Companies..................................................................................V.S. Industry Bhd..................................................................................................10Pentamaster Corporation Bhd................................................................................16Globetronics Technology Bhd .....................................................................
发表评论取消回复