SEE: Analysts more bullish on ThaiBev despite weak FY20 results
“VMS has guided that new products/solutions engineered and developed in its research and development (R&D) labs are scheduled for release into the end-markets in FY2021F by its partners and customers in several technology domains,” says Tng. “We think 1QFY2021F net profit will grow y-o-y as 1QFY2020 net profit was affected by lockdowns relating to the Covid-19 pandemic,” he adds. “We believe VMS can achieve average earnings per share (EPS) growth of 15.4% over FY21-22F, hence our price-to-earnings (P/E) peg of 18.5x (0.5 standard deviation or s.d. above its 14-year average of 15x), on FY21F EPS, leading to a target price of $24.84,” says Tng, who has rated VMS at “add”. For Nanofilm Technologies, Tng is positive on the company due to its being the only company in the world that provides proprietary and environmentally-friendly Filtered Cathodic Vacuum Arc (FCVA) coating technology at scale. “Supported by its patented technology and sole supplier status to its key customers, we believe the company will increase its wallet share with its existing customers and grow EPS at a compound annual growth rate (CAGR) of 35% over FY2019-2022F,” he says.
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“By sub-segment, the highest y-o-y revenue growth is headed by memory chips (+13.3%), optoelectronics chips (+10.2%) and analog chips (+8.6%). Memory chips is projected to be the biggest sub-segment, accounting for 29% of 2021F global semiconductor sales, followed by logic chips with a 26% share.” Tng has identified four drivers of the semiconductor industry being: artificial intelligence (AI) chips, 5G, Internet of Things (IoT) and self-driving cars.