24 July 2025
Technology | Technology
Malaysian Pacific Industries, Unisem, Cloudpoint, Coraza: Malaysia Technology Sector Recovery Momentum Intact; Keep OVERWEIGHT
- Maintain OVERWEIGHT. Our recent site visits reinforce expectations of an improved earnings trajectory, underpinned by stronger revenue and positive guidance from most players across the supply chain. This suggests the sector’s recovery remains intact. Valuations are attractive, with the sector trading below 20x forward P/E – well under its 5-year historical mean (-1SD). We see potential for a sector re-rating as earnings momentum builds and global uncertainties ease.
- Healthy uptrend. Engineering support players are recording stronger order books and robust revenue growth a leading indicator for automated test equipment (ATE) manufacturers and OSATs. Electronics manufacturing services (EMS) players also report healthy visibility, underpinned by increased project transfers and customer enquiries. We expect stronger numbers in 2Q and 2H, supported by sector recovery, despite lingering US tariff concerns. Most companies maintain an optimistic outlook, citing higher loadings from replacement cycles, new product introductions, demand recovery, and technology advancements – complemented by fresh opportunities from “Plus One” strategies. Some key takeaways are summarised on page 2.
- Tariff. Malaysia is well positioned to benefit from both short-term order diversion and long-term manufacturing relocation, supported by its developed ecosystem, skilled talent pool, and infrastructure. While tariffs could induce demand volatility, the sector remains in an upcycle with no major disruptions anticipated. Notably, most semiconductor supply chains are exempted, and Malaysia’s parts and components suppliers have minimal direct export to the US – estimated at below 15% for most.
- Position for a broad-based recovery. The Bursa Malaysia Technology Index (KLTEC) remains negative YTD, weighed by: i) Softer-than-expected results, ii) US tariff and sanction concerns, and iii) risk-off market sentiment. However, current valuations are compelling, and improved guidance across the sector suggests investors should position for the recovery, despite all external noise. Revenue trends have strengthened since end-2024, even if near-term bottomline growth may be dampened by unrealised FX losses. We forecast sector earnings growth of +6% YoY for FY25 and +39% YoY for FY26.
- Sector Top Picks. Malaysian Pacific Industries and Unisem are key beneficiaries of the chip sector recovery, China’s demand rebound, and the commencement of new programmes/customers. On the domestic front, Cloudpoint Technology would continue to benefit from the digitalisation trend, IT, and cyber security spending of the financial institutions (FI). Among the smaller-cap stocks, Coraza Integrated Technology should see a sterling earnings rebound, supported by robust revenue growth.
- Downside risks: Tariff concerns slowing end demand, slower-than-expected orders, technology obsolescence, and unfavourable FX movements.
| Stocks Covered | 9 |
| Rating (Buy/Neutral/Sell): | 8/1/0 |
| Last 12m Earnings Revision Trend: | Negative |
Top Picks
| Top Picks | Target Price |
|---|---|
| Malaysian Pacific Industries (MPI MK) – BUY | MYR29.70 |
| Unisem (M) (UNI MK) – BUY | MYR2.93 |
| Cloudpoint Technology (CLOUDPT MK) – BUY | MYR1.13 |
| Coraza Integrated Technology (CORAZA MK) – BUY | MYR0.67 |
Analysts
+603 2302 8115
lee.meng.horng@rhbgroup.com
+603 2302 8121
miza.izaimi@rhbgroup.com
Chart: KLTEC vs NASDAQ vs SOX (YTD performance)
A line chart from Jan 25 to Jun 25 shows the year-to-date performance of the KLTEC, NASDAQ, and SOX indices. The KLTEC index (blue line) shows a consistent downward trend, starting around 0% and ending near -30%. The SOX index (light grey) and NASDAQ (dark grey) show more volatility but generally outperform KLTEC, with SOX finishing around -10% and NASDAQ around 0%.
Source: Company data, RHB
| Company Name | Rating | Target (MYR) | % Upside (Downside) | P/E (x) Dec-26F | P/B (x) Dec-26F | ROAE (%) Dec-26F | Yield (%) Dec-26F |
|---|---|---|---|---|---|---|---|
| Cloudpoint Technology | Buy | 1.13 | 47.2 | 14.8 | 3.4 | 25.6 | 2.2 |
| Coraza Integrated Technology | Buy | 0.67 | 40.0 | 10.2 | 1.4 | 14.6 | – |
| CTOS Digital | Buy | 1.49 | 67.2 | 14.7 | 2.9 | 19.2 | 4.8 |
| Inari Amertron | Buy | 2.45 | 20.5 | 22.7 | 2.6 | 11.5 | 3.7 |
| JHM Consolidation | Neutral | 0.40 | 22.8 | 13.8 | 0.6 | 4.7 | 3.1 |
| Malaysian Pacific Industries | Buy | 29.70 | 54.4 | 15.7 | 1.7 | 11.2 | 2.9 |
| NexG | Buy | 0.48 | (6.8) | 24.8 | 3.8 | 16.6 | 0.4 |
| Pentamaster Corp | Buy | 3.72 | (1.4) | 29.3 | 3.1 | 10.9 | 0.5 |
| Unisem (M) | Buy | 2.93 | 32.6 | 18.0 | 1.6 | 8.7 | 4.2 |
Source: Company data, RHB
Key takeaways from site visits to Penang
Engineering support
Stronger orderbooks and robust revenue growth trend seen from both the back-end and front-end automated test equipment (ATE)/semiconductor production equipment (SPE) players. They are seeing more outsourcing trend and various opportunities arising from the geopolitical situations. While front-loading activities cannot be discounted, the players do not see any pullback in orders and forecasts look healthy into 2H. Current tariff is exempted for semiconductors and the majority of the parts and components do not export directly to US, even for equipment, which is mainly destined for manufacturing plants in Asia instead of the US. Major challenges are talent and execution for new product introductions which may undermine margins.
ATE
The stronger revenue trend from the engineering support players often serve as a leading indicator for ATE manufacturers and OSATs. Our channel checks from various players indicate upticks in purchase orders from China, India, and Taiwan – showing healthy recovery trend after a temporal pause in early 2025. Capex from OSATs and integrated database managements (IDMs) are starting to flow with various sub-segments starting to uptick following two years of inventory adjustments. ATEs are now pivoting to the new growth engines by moving up to the higher value equipment segment in silicon photonics and complementary metal-oxide semiconductor (CMOS), and advanced packaging-related testers and handlers. Main challenges for these players include talent shortage, cost escalations, and competition.
OSAT
The smartphone and PC segments should see stable-to-improved loadings, stemming from the replacement cycle and advancement of technology (foldable phone), despite lower requirement for testing time for certain chips may prevail. Automotive side is bottoming out with an expectations of volume recovery into 2H, although content growth for certain power module and microprocessors remains. A read-through from the analog semiconductor players indicates a recovery. The industrial segment should continue its upward trajectory, supported by growth in the server market. Generally, diversified players should see a continue uptrend in revenue QoQ and into 2H25. More opportunities arise from the “Plus One” strategies and advancement of technologies with servers, autonomous driving, and IoT. Stronger MYR against USD may undermine margins but operating leverage remains the key to profitability. Competition and pricing could be detrimental to margins.
EMS
Most players are benefitting from increase in project transfers and relocation of orders into the region despite the tariff concerns. There is also organic growth for most end-customers with better loadings across the segment. However, we understand that server business may see a temporal slowdown due to shift in platforms and models. Automation, cost containment, and FX movements are key factors to drive profitability and stay competitive.
Figure 1: Revenue growth of local supply chain by sub-segment
| Quarter | Revenue Growth (YoY) |
|---|---|
| 2Q23 | -0.8% |
| 3Q23 | -15.6% |
| 4Q23 | -8.1% |
| 1Q24 | -5.9% |
| 2Q24 | +1.3% |
| 3Q24 | +11.1% |
| 4Q24 | +16.5% |
| 1Q25 | +5.8% |
Source: Bloomberg
Recovery intact
Global semiconductor sales, as compiled by the Semiconductor Industry Association or SIA, continue to show a firm recovery – forecasting an 11.2% YoY growth in 2025. While 2024 growth was mainly driven by demand for logic integrated circuits or ICs and a strong rebound in memory ASPs – spurred by the AI server and equipment boom – 2025 is expected to bring a broader-based recovery across all segments. There are signs of improvement in ATE and strengthening activity in the front-end semiconductor space, supporting our view of a sustained upcycle accelerating into 2025.
Semiconductor Equipment and Materials International (SEMI) forecasts global sales of total semiconductor manufacturing equipment to reach USD125.5bn (from USD121bn previously) in 2025 and USD138bn in 2026. These figures represent a 7.4% YoY increase in 2025 and a 10% increase in 2026. This growth is expected to be driven by strong demand in leading-edge logic, memory, and next-generation technology transitions. Specifically, the expansion of the back-end segment is propelled by rising device complexity and the performance demands of AI and high-bandwidth memory (HBM), although some weakness persists in the automotive, industrial, and consumer sectors.
Figure 2: Value of the worldwide semiconductor market by region (Amounts in US$M)
| Region | 2024 | 2025 | 2026 | YoY Growth 2024 (%) | YoY Growth 2025 (%) | YoY Growth 2026 (%) |
|---|---|---|---|---|---|---|
| Americas | 195,123 | 230,256 | 252,472 | 45.2 | 18.0 | 9.6 |
| Europe | 51,250 | 52,969 | 56,201 | -8.1 | 3.4 | 6.1 |
| Japan | 46,739 | 47,037 | 49,776 | 0.0 | 0.6 | 5.8 |
| Asia Pacific | 337,437 | 370,613 | 402,252 | 16.4 | 9.8 | 8.5 |
| Total World | 630,549 | 700,874 | 760,700 | 19.7 | 11.2 | 8.5 |
| Discrete Semiconductors | 31,026 | 30,219 | 32,733 | -12.7 | -2.6 | 8.3 |
| Optoelectronics | 41,095 | 39,290 | 39,956 | -4.8 | -4.4 | 1.7 |
| Sensors | 18,923 | 19,782 | 20,622 | -4.1 | 4.5 | 4.2 |
| Integrated Circuits | 539,505 | 611,582 | 667,390 | 25.9 | 13.4 | 9.1 |
| – Analog | 79,588 | 81,642 | 85,535 | -2.0 | 2.6 | 4.8 |
| – Micro | 78,633 | 77,840 | 80,186 | 3.0 | -1.0 | 3.0 |
| – Logic | 215,768 | 267,259 | 286,842 | 20.8 | 23.9 | 7.3 |
| – Memory | 165,516 | 184,841 | 214,826 | 79.3 | 11.7 | 16.2 |
| Total Products | 630,549 | 700,874 | 760,700 | 19.7 | 11.2 | 8.5 |
Source: World Semiconductor Trade Statistics
Figure 3: Total equipment forecast (USD bn)
| Equipment Type | 2023 | 2024 | 2025F | 2026F |
|---|---|---|---|---|
| A&P Equipment | 4.03 | 5.05 | 5.44 | 6.25 |
| Test Equipment | 6.27 | 7.54 | 9.30 | 9.77 |
| Wafer Fab Equipment | 95.61 | 104.27 | 110.77 | 122.10 |
Source: SEMI Equipment Market Data Subscription
Figure 4: PC market annual growth
A bar chart shows PC market annual growth projections. The forecast indicates near 0% growth for 2024Q1 and 2024Q2, rising to approximately 9% in 2025Q1, then slightly decreasing but remaining positive.
Source: International Data Corporation (IDC)
Figure 5: Quarterly shipments of smartphones (m units)
A bar chart displays quarterly smartphone shipments. The data shows a peak around 2024Q4. The YoY growth line fluctuates, showing a sharp increase for 2024Q2 before stabilizing.
Source: IDC
Figure 6: WSTS and SOX indices lead the KLTEC
A historical line chart from 2010 to 2025 shows the performance of monthly global semiconductor sales, the KLTEC Index, and the SOX Index. The chart illustrates that the SOX Index and semiconductor sales trends generally lead the movements of the KLTEC Index.
Source: Bloomberg, RHB
Figure 7: Historical forward P/E for KLTEC (over five years)
A line chart from July 2020 to July 2024 plots the forward P/E ratio for the KLTEC index. The mean P/E is 26.1x, with one standard deviation above at 31.4x and one below at 20.9x. The current P/E is shown to be trading below the mean.
Source: Bloomberg, RHB
Figure 8: Peer comparison
| Ticker | Last price (MYR) | Mkt cap (USDm) | P/E (x) | EPS growth (%) | P/BV (x) | ROE (%) | DY (%) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY25F | FY26F | FY25F | FY26F | FY25F | FY26F | FY25F | FY25F | FY25F | FY25F | ||||
| Cloudpoint Technology | CLOUDPT MK | 0.77 | 97 | 16.4 | 13.7 | 25.0 | 20.0 | 4.3 | 3.5 | 27.4 | 0.0 | ||
| Coraza Integrated Technology | CORAZA MK | 0.48 | 56 | 13.7 | 10.2 | 294.9 | 34.4 | 1.6 | 1.4 | 3.4 | 0.0 | ||
| CTOS Digital | CTOS MK | 0.89 | 486 | 17.0 | 14.7 | 13.0 | 15.2 | 3.5 | 3.3 | 0.2 | 4.1 | ||
| NexG* | DSON MK | 0.52 | 357 | 24.0 | 25.0 | -18.4 | -4.3 | 4.3 | 3.7 | 19.4 | 0.4 | ||
| Inari Amertron** | INRI MK | 2.03 | 1,819 | 28.7 | 24.2 | -12.9 | 17.5 | 2.3 | 2.3 | 9.5 | 3.0 | ||
| JHM Consolidation | JHMC MK | 0.33 | 47 | 27.5 | 13.8 | Nm | 98.6 | 0.7 | 0.7 | 2.4 | 0.0 | ||
| Malaysian Pacific Industries** | MPI MK | 19.24 | 907 | 24.5 | 16.6 | -9.5 | 47.3 | 1.9 | 1.8 | 7.8 | 2.3 | ||
| Pentamaster Corporation | PENT MK | 3.77 | 634 | 34.0 | 29.2 | -4.1 | 16.5 | 3.3 | 3.0 | 11.4 | 0.0 | ||
| Unisem (M) | UNI MK | 2.21 | 843 | 32.1 | 18.0 | 106.3 | 77.8 | 1.6 | 1.6 | 5.0 | 3.1 | ||
| Sector average (simple average) | 21.7 | 17.1 | 44.7 | 30.2 | 2.0 | 1.8 | 7.3 | 1.8 | |||||
Note: *FYE (Mar) refers to FY25F. **FYE (Jun) refers to FY25F
Source: Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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