In addition, Tan notes that the World Semiconductor Trade Statistics industry trade group has forecasted worldwide industry sales at US$527.2 billion, up 19.7% y-o-y.
To that end, Tng views GVT will be a beneficiary of the strong semiconductor sales projected, considering that its semiconductor segment made up 71% of GVT’s 1QFY2021 revenue.
In addition, Tng points out that Malaysia’s Movement Control Order 3.0 (MCO 3.0) will not likely have a material impact on the group’s performance, given that it has obtained a permit from authorities to continue operating during the lockdown period. Its Penang facility will remain operational, subject to a 60% workforce limit constraint.
Tng has kept his $1.12 target price for GVT unchanged, derived from a FY2021 P/BV multiple of 5.37 times.
Key risks to his rating and target price are shortfalls in revenue forecasts due to work stoppages at factories run by GVT or its customers due to measures to contain the Covid-19 pandemic, while re-rating catalysts include strong-than-expected results and accretive mergers and acquisitions.
As at 3.38pm, shares in GVT are 1.5 cents or 1.77% higher at 86.5 cents.
Photo: Samuel Isaac Chua/The Edge Singapore
