KUALA LUMPUR (Jan 25): CGS-CIMB Research has upgraded its call on the Malaysian semiconductor sector to "overweight" from "neutral", saying it expects the sector to benefit from 5G network proliferation and higher power management content in electric vehicles (EVs). 

In a note today, CGS-CIMB analyst Mohd Shanaz Noor Azam said his team projects a 39% sector net profit growth in 2021 on the back of higher utilisation of semiconductors, propelled by radio frequency (RF) content growth in 5G networks and smartphones, a recovery in automotive demand and robust demand for cloud infrastructure services.

Shanaz also opined that the long-term growth prospects are attractive as the team projects the sector to deliver a three-year (2019-2022) earnings per share (EPS) compound annual growth rate (CAGR) of 29%. 

CGS-CIMB's top picks for the sector include Inari Amertron Bhd and Malaysian Pacific Industries Bhd (MPI). Mohd Shanaz said the two companies are key beneficiaries of an increase in RF chip demand going into 5G smartphones given their exposure to RF chip assembly, packaging and testing processes.

The share prices of both Inari Amertron and MPI were, however, lower today. As at the time of writing, Inari Amertron was trading down seven sen or 2.17% at RM3.16, while MPI was down 50 sen or 1.38% at RM30.10. 

Some technology-linked stocks were also among the top 10 losers on Bursa Malaysia today, including UWC Bhd (-3.69%), KESM Industries Bhd (-3.09%) and ViTrox Corp Bhd (-2.02%). 

The Bursa Malaysia Technology Index was down 2.91% at 78.29.