“Some might argue that there is a lack of high-tech companies in Malaysia, but the local tech ecosystem and its players remain proxies for technological trends. The strong earnings profile of technology counters in recent years is a showcase of not only their capabilities but also the emerging importance of home-grown Malaysian tech companies in the global semiconductor supply chain,” says De Alwis.
Kenanga Growth Fund has the largest exposure to Frontken Corp Bhd, Greatech Technology Bhd and Pentamaster Corp Bhd.
Greatech’s clients include global leaders in the solar energy and electric vehicle space. Meanwhile, Frontken’s strong track record of meeting the semiconductor industry’s stringent requirements and leading-edge technologies create a strong barrier to entry and is testament to the firm’s know-how and capabilities.
As long as the local tech companies stay competitive and relevant to the global smartphone, automotive and aerospace supply chain, their earnings growth prospects will sustain, says Abd Razak.
He is positive that semiconductor test equipment manufacturers, chip designing houses, wafer cleaning service providers and those involved in assembly and testing services will benefit from 5G-related developments.
Currently, the tech company that BIMB i Growth has the largest exposure to is JHM Consolidation Bhd, a microelectronics and LED manufacturing company.
“We are optimistic about this counter because of its strong capability to serve the top-tier car makers globally and its potential to penetrate into the aerospace industry in the medium-term horizon,” says Abd Razak.
InterPac Dana Safi’s largest technology holdings are Globetronics Technology Bhd, Dufu Technology Corp Bhd and Datasonic Group Bhd.
“We have also invested in Pentamaster and Greatech, which are part of our 5G play. They deliver strong earnings per share. Greatech has benefited from last year’s budget and will continue to benefit from the upcoming budget owing to the government’s incentives for automation and e-commerce,” says Nazri.
PMB’s fund has major exposure to Frontken, ViTrox Corp Bhd and engineering firm UWC Bhd due to their good fundamentals and diverse clients.
“The thematic trends [like 5G and Internet of Things] will spur the growth of the sector. Also, companies that take innovative steps and actively develop applications will contribute to the growth of the sector,” says Isnami.
Apart from semiconductor-related firms, some funds also have exposure to companies involved in e-commerce and digital services. For instance, PMB has invested in digital service provider MyEG Services Bhd and e-payment service providers GHL Systems Bhd and Revenue Group Bhd.
The fintech segment shares a similar growth profile to the other tech stocks, observes De Alwis. The migration from paper-based payments to electronic payments, as well as the growing volume of online and mobile payment transactions, bode well for companies in the electronic payment space.
“Companies like Revenue Group, for instance, are proxies for riding the robust domestic e-commerce industry … Unfortunately, there are only a handful of these payment-related companies available in Malaysia. We see more alternatives in markets abroad that we are invested in,” he says.
