Time to raise bets on Malaysia semiconductor stocks on expected ‘market-friendly' trade deal: UOBKH
In a Wednesday (Jul 2) report, the brokerage said it was time to raise bets on Malaysia with the expectations of favourable trade deals with the US.
'In anticipation of market-friendly US trade deals being struck and Malaysia retaining its onshoring destination status, our July 2025 picks raise the bet on semiconductor-related stocks, while still maintaining our emphasis on domestic infrastructure plays,' said UOB analysts.
Maybank on Jul 1 also predicted that Malaysia could shine in the next phase of global trade, with US tariffs on the country likely to stay at a lower band relative to other nations.
UOB's top picks for July 2025 included engineering solutions provider Coraza, pharmaceutical company Duopharma Biotech, property player Eco World Development, Gamuda, Hume Cement Industries, semiconductor services provider IJM and digital services provider MY EG Services – all of which were assigned a 'buy' rating.
Semiconductor-related stocks to succeed in short-run
A 'softening stance' on the US' tariff demands should culminate in market-friendly US-Malaysia trade deals, UOBKH analysts said.
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'This expectation, together with strong anecdotal evidence of Malaysian electrical and electronics companies significantly clinching orders and order enquiries since the US' 90-day tariff pause in April, should trigger further near-term upside especially for semiconductor-related stocks,' UOBKH analysts said.
These semiconductor-related players should get near-term wins before potential profit taking and ahead of forex-related challenges in the upcoming quarterly results season in June and July, they added.
One new addition to the brokerage's list of top picks, semiconductor-related laggard Coraza, logged consistent year-on-year revenue improvements across the past four quarters, said UOBKH analyst Desmond Chong.
He highlighted the company's 'solid' order momentum, as its current outstanding orderbook is at RM80 million (S$24.1 million) – 10 per cent above the previous quarter's quantum, with the bulk of orders coming from the semiconductor industry.
The company is investing in higher and more sophisticated equipment to cater to the needs of its customers, Chong said. Upgrades for a newly acquired plant opposite its existing Nibong Tebal plant are on track, while another new factory adjacent to the plant is set to become operational in the fourth quarter of 2025.
The timeline given for Coraza was six to nine months with a target price of RM0.66.
Inari, a company involved in semiconductor assembly, is another new addition to UOBKH's top picks.
The brokerage lifted its target price upwards to RM2.36 from RM1.90, and assigned it a six to nine-month timeline.
While the group's share price dropped 34 per cent in the year to date, Chong noted that its radio frequency segment sustained a 'relatively healthy' utilisation rate of 65 to 70 per cent.
Inari is poised to commercialise on new product pipelines in upcoming quarters, with its 2025 growth to be driven largely by its flagship radio frequency business.
The group has also made recent forays into advanced packaging platforms such as flip-chip chip-scale packages and flip-chip ball grid arrays, Chong said.
'These technologies offer ultra-high performance, high memory bandwidth, and heterogeneous integration capabilities to cater to the increasing demand for cutting-edge semiconductor solutions in artificial intelligence, server, networking, smart devices and industrial applications,' he added.
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