KUALA LUMPUR (March 3): AffinHwang Capital Research has maintained its “Neutral” rating on the technology sector and said semiconductor players have generally guided for revenue contraction quarter-on-quarter (q-o-q) in 1Q16.

In a note today, the research house said that broadly, the players are expecting up to a 15% contraction in revenue q-o-q.

AffingHwang Capital nevertheless said it believed that most of the negatives appear to be priced in.

“Stock prices for our semiconductor players have generally pulled back by 21%-30% since their peaks in 4Q2015, potentially reflecting the bad news,” it said.

The research house said sector earnings momentum remains positive both on a year-on-year and q-o-q basis.

It said earnings growth, however, continues to be underpinned by a weaker currency rather than operational factors.

“Concerns over an inventory imbalance and the possible strengthening of the ringgit are also valid.

“We maintain our Neutral stance and are selectively positive on stocks that can offer real growth. For sector exposure we like Inari Ametron Bhd and Scicom (MSC) Bhd,” it said.