Global semiconductor sales grew 4% y-o-y in December, registering the secondconsecutive month of growth, while the industry’s book-to-bill ratio also picked up to 0.92x amid higher bookings. While we are still optimistically cautious on the sector, we need affirmation from continued positive y-o-y monthly sales growth to confirm our hypothesis that the semiconductor industry has already bottomed out. Both MPI and Unisem remain NEUTRALs, with their FVs unchanged at MYR2.70 and MYR1.05 respectively.
Second consecutive month of growth. Yesterday, the Semiconductor Industry Association (SIA) reported that global chip sales in December grew 4% y-o-y to USD24.7bn, making it the second consecutive month of growth. The improvement was again led by the Americas and Asia Pacific regions (+13% and +7% y-o-y respectively), while Europe and Japan stayed in negative territory (-5% and -11% y-o-y respectively). On a cumulative basis, FY12 worldwide semiconductor sales reached USD219.1bn, reflecting the industry’s third-highest annual sales but a 3% y-o-y decline from the record USD300.9bn set in FY11. However, we reckon it is still too preliminary to conclude that the positive monthly sales momentum could follow through into FY13 due to the short industry visibility. That said, the two consecutive months of positive growth, which was last achieved almost three years ago, is a good indicator for the industry.
December book-to-bill ratio rises to 0.92x. Similarly, the semiconductor equipment industry’s book-to-bill ratio also picked up in December to 0.92x from 0.79x in November. This time, the increase was due to higher bookings, unlike in November, when billings had declined at a quicker pace compared to bookings, which gave rise to an artificially improved book-to-bill ratio. Data from the Semiconductor Equipment and Materials International (SEMI) indicates that December’s bookings surged by 29% m-o-m while billings rose by 11% m-o-m. Overall in FY12, book-to-bill improved to 0.94x (from 0.87x in FY11) but this was on the back of a 17% y-o-y drop in billings vs a 10% y-o-y decline in bookings. SEMI cited that the FY13 equipment outlook remains uncertain, but the key investment drivers at the start of the year are foundry and advanced packaging segments.
Maintain NEUTRAL on sector. There is no change to our view as we are still optimistically cautious on the semiconductor industry. We need affirmation from continued positive y-o-y monthly sales growth to confirm our hypothesis that the y-o-y decline in global semiconductor sales has already bottomed out. Hence, we are still NEUTRAL on both MPI and Unisem with FVs of MYR2.70 and MYR1.05 respectively. Recall, early last year, these stocks rallied but fell drastically subsequently, contrary to our anticipation of an imminent bottoming of the sector.
Second consecutive month of growth. Yesterday, the Semiconductor Industry Association (SIA) reported that global chip sales in December grew 4% y-o-y to USD24.7bn, making it the second consecutive month of growth. The improvement was again led by the Americas and Asia Pacific regions (+13% and +7% y-o-y respectively), while Europe and Japan stayed in negative territory (-5% and -11% y-o-y respectively). On a cumulative basis, FY12 worldwide semiconductor sales reached USD219.1bn, reflecting the industry’s third-highest annual sales but a 3% y-o-y decline from the record USD300.9bn set in FY11. However, we reckon it is still too preliminary to conclude that the positive monthly sales momentum could follow through into FY13 due to the short industry visibility. That said, the two consecutive months of positive growth, which was last achieved almost three years ago, is a good indicator for the industry.
December book-to-bill ratio rises to 0.92x. Similarly, the semiconductor equipment industry’s book-to-bill ratio also picked up in December to 0.92x from 0.79x in November. This time, the increase was due to higher bookings, unlike in November, when billings had declined at a quicker pace compared to bookings, which gave rise to an artificially improved book-to-bill ratio. Data from the Semiconductor Equipment and Materials International (SEMI) indicates that December’s bookings surged by 29% m-o-m while billings rose by 11% m-o-m. Overall in FY12, book-to-bill improved to 0.94x (from 0.87x in FY11) but this was on the back of a 17% y-o-y drop in billings vs a 10% y-o-y decline in bookings. SEMI cited that the FY13 equipment outlook remains uncertain, but the key investment drivers at the start of the year are foundry and advanced packaging segments.
Maintain NEUTRAL on sector. There is no change to our view as we are still optimistically cautious on the semiconductor industry. We need affirmation from continued positive y-o-y monthly sales growth to confirm our hypothesis that the y-o-y decline in global semiconductor sales has already bottomed out. Hence, we are still NEUTRAL on both MPI and Unisem with FVs of MYR2.70 and MYR1.05 respectively. Recall, early last year, these stocks rallied but fell drastically subsequently, contrary to our anticipation of an imminent bottoming of the sector.
Global chip sales in Dec grew by 4% y-o-y to USD24.7bn, making it the second consecutive month of growth, thanks to the Americas and Asia Pacific
Book-to-bill ratio improved to 0.92x in Dec as bookings spiked by 29% m-o-m while billings rose by only 11% m-o-m
FY12 worldwide semiconductor sales reached USD219.1bn (-3% y-o-y). For FY13/FY14, the World Semiconductor Trade Statistics (WSTS) is forecasting the industry to grow by 4.5%/5.2% y-o-y respectively
FY12 book-to-bill improved to 0.94x from 0.87x in FY11 but this was on the back of a 17% y-o-y drop in billings vs a 10% y-o-y decline in bookings. SEMI cited FY13 equipment outlook remains uncertain but it has pointed that key investment drivers at the start of the year are foundry and advanced packaging segments
We noticed that when monthly global semiconductor sales improved y-o-y, the forward P/NTA of Unisem and MPI increased accordingly. Therefore, any upsurge in y-o-y sales moving forward, may provide an opportunity for investors to trade given the temporarily rerating of the stocks.
Source: OSK
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