SINGAPORE (May 19): Amid the Covid-19 pandemic, semiconductor and equipment companies have been deemed “critical” in many countries.
For AEM, Lai says Intel’s continued spending on 10, 7 and 5nm chips could be a key driver for the counter’s prospects.
AMAT is also looking forward to strong double-digit growth for the year on the back of a single digit increment in 3QFY2020, followed by a further increase in 4QFY2020.
“AMAT is not seeing strong capacity additions from memory customers, but investments based on technology roadmaps are progressing to plan as this affects the cost structure of memory chipmakers when industries recover,” says Lai.
“Research found that AMAT gained significant share in PVD in 2019,” observes Lai. “AMAT’s view for sequentially higher revenues over the next two quarters present upside potential for UMS, in our view,” he adds.
To reflect AMAT’s strong momentum in the near term, Lai has raised its FY2020-22E earnings per share (EPS) forecasts by 3-5%, which would translate to an average return on equity (ROE) of 17.7% for the period.
Maybank is reiterating its “positive” stance on the semiconductor equipment sector. The brokerage also has “buy” calls on AEM and UMS with target prices of $4.04 and $1.00 respectively.
As at 12.21pm, shares in AEM are trading five cents higher, or 1.7% up, at $3.07 while shares in UMS are trading one cent higher, or 1.1% up, at 91 cents.