Tech stocks added RM15.8b to market cap in January


THE rally in tech stocks in January saw components of Bursa Malaysia’s Technology Index add RM15.8 billion to their market capitalisation.

The ongoing semiconductor shortage in the world market has made tech stocks among the top performers at the start of the year, with many reaching all-time highs last month as counters in other sectors suffered declines on risk-off trades by investors amid expectations that the current Movement Control Order (MCO) 2.0 may be extended beyond Feb 4.

The benchmark tech index has risen by 12.1 points from 69.86 points to 81.96 points in the past month, with 26 counters making gains and 11 stocks losing value. Four counters were unchanged, data by Bloomberg showed.

Nine out of the index’s top 10 counters by market cap made gains, adding RM12.8 billion in market value. MyEG Services Bhd was the only counter unchanged as its market capitalisation remained at RM6.94 billion.

Top gainers were Inari Amertron Bhd, Unisem (M) Bhd and Malaysian Pacific Industries Bhd (MPI) which have seen their share price rise by more than 25% year-to-date (YTD).

Inari’s stock price rose 25% or 68 sen from RM2.72 on Jan 4, 2021, to close at RM3.40 last Friday, with analysts having an ‘Outperform’ call on the company.

The tech firm is expected to benefit from the deployment of 5G wireless technology and capitalise on new chip orders by utilising its recently completed 680,000 sq ft floor space expansion in Batu Kawan, Penang.

Analysts at Public Investment Bank Bhd and Kenanga Investment Bank Bhd have recently raised their target price for Inari to RM3.80 and RM4 respectively. MPI’s share price was up by 29.4% or RM7.50 to RM33 in the past month on higher estimated earnings per share, while Unisem’s stock rose by 32.5% or RM2.06 to RM8.40. TA Securities Holdings Bhd recently revised its target price for Unisem to RM9.42 due to its presence in China.

Other gainers included Greatech Technology Bhd, which saw its share price climb by 19.6% or 92 sen to RM5.62 in the period, especially after it announced plans to expand its capacity via the purchase of a 5.9-acre (2.39ha) leasehold land in Penang.

The majority of companies under the tech index are now expected to deliver all-time high earnings in their upcoming quarterly results scheduled this month.

Hong Leong Investment Bank Bhd in its most recent report on the technology sector reiterated its ‘Overweight’ call as it expects the segment to experience multi-year earnings growth supported by fundamental exponential demand.

Its analyst Tan J Young said the major growth driver for the sector would be the recovery in smartphones, along with the communications segment on the back of 5G proliferation.

“We maintain our tactical position in favour of front-end players as many countries have rushed to develop their semiconductor capabilities, especially in leading-edge front-end fabrication (foundry) to be self-sufficient on the back of national strategic and security interests,” Tan said.