US dollar appreciation to benefit Malaysia semicon players in short term, says AffinHwang Capital

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KUALA LUMPUR (Dec 5): AffinHwang Capital Research has maintained its “Neutral” rating on the Technology sector and said that in theory, the sharp US dollar appreciation should benefit Malaysia’s semiconductor players.

In a note Friday, the research house said its sensitivity analysis shows an EPS impact of 2-3% for every 1% appreciation in the US dollar.

However, the research house said this relationship only holds in the short term.

“Longer term, these benefits are likely to be shared with their customers, which also works to their advantage when the currency turns unfavourable.

“We thus maintain our Neutral sector view as the risk-reward trade-off is less favourable.

“Inari Amertron Bhd remains our top sector pick on its attractive growth prospects (3-year EPS CAGR of 26%) and valuation (11x CY15E PER).