KUALA LUMPUR (Jan 27): Shares of Vitrox Corporation Bhd rose almost 11% in morning trades on institutional buying and the encouraging prospect of the semiconductor sector.

As at 10.35am, Vitrox (fundamental: 3; valuation: 1.5) was traded at RM2.89, up 25 sen or 9.47% with 984,900 units traded, giving it a market capitalisation of RM614.79 million.

It was the second largest gainer across the bourse, having earlier gained 30 sen or 11.36% to trade at RM2.94.

In comparison, Unisem (M) Bhd was up 2 sen or 0.98% at RM2.06 with 184,100 shares done. With the current price, it has a market capitalisation of RM1.375 billion.

"The share price rise is in tandem of the positive outlook of the semiconductor sector," a dealer told theedgemarkets.com over the phone.

"The semicoductor players are the beneficiaries of the weaker ringgit, with order already going into overdrive," he said.

Another dealer said institutional funds had been buying into Vitrox since Jan 14.

"There were significant funds buying into the counter until yesterday," he said, expecting the trend to continue today.

"From the technical chart, the counter is still fundamentally cheap as compared to others," he added.

Meanwhile, Maybank Investment Bank Bhd (MIBB) initiated coverage on Vitrox with a "Buy" rating and target price of RM3.55.

"We are initiating coverage with Buy with target price of RM3.55, pegged to 12.6 times calendar year 2016 (CY16) price top earnings ratio (PER), backed by 3% yield (35% DPR)," MIBB said in a note today.

It said the near-term catalysts for Vitrox were its position as a net US dollar exporter, as well as rising automation on aggressive semiconductor activities.

"Rising labour costs and the increasing complexity of semiconductor packages are key drivers for more advanced test and inspection automation in search of optimum production yields," the firm said.

The firm noted that high barriers to entry from extensive domain knowledge requirement, would cap competition and price erosion especially in the advanced inspection equipment segment.

MIBB said the inspection equipment’s addressable market was estimated to be around US$1.4 billion to US$1.6 billion , distributed among 10 to 12 prominent players globally.

"In order to cater to semiconductor’s revenue growth in the next five years, Semiconductor Equipment and Materials International (SEMI) expects a 15% jump in equipment sales to US$44 billion, opening windows of opportunities for Vitrox," the firm said.

According to MIBB, Vitrox is an under-researched Shariah-compliant growth stock with projected 2-year earnings CAGR of 17% and a strong balance sheet (net cash of RM47 million, as at end-Sep 2014).