OSK, maintains their UNDERWEIGHT call on the Technology sector as we expect sub par growth in the seasonally sturdy 3Q of the year. Although valuations have retraced to as low as below net book value for some, we believe it is still premature to attempt bottom-fishing with firm recovery unlikely until 2012 given the current global macro outlook.
Despite the recent sharp spike in USD against RM which could help to lift earnings given the export nature of local technology manufacturers, OSK upholds their negative view on the sector due to the weakness in end-consumer demand for HDDs amidst rising demand for solid-state drives and the impact from floods in Thailand where these companies presences.
Below are the target prices/fair value and ratings for selected technology stocks.
|Market Cap (RM million)
Source : OSK Research