RHBInvest Research - Sector Call

Wednesday, August 3, 2011

Sector Call

Timber: Temporary build-up in plywood inventory in Japan Overweight

Sector Update

¨ According to the latest Japan Lumber Report, there has been a build-up of imported plywood inventory in Japan (mainly in thick panel) due to the arrivals of orders placed after the March earthquake disaster. As a result, prices for CP and SP reported by timber companies have weakened recently from its peak of US $620/m3 in May/June to about US$540-560/m3 by July/August.

Semiconductor: No signs of a turning point yet Neutral

Unisem: Fair value RM1.76 Market Perform

Notion: Fair value RM2.10 Market Perform

JCY: Fair value RM0.53 Underperform

MPI: Fair value RM4.18 Underperform

¨ Jun 11 chips sales of US$24.7bn posted the first drop on yoy basis by -0.5% after chalking yoy growth since the Oct 09 when it dropped 2.4%. The weaker chip sales suggests that chip demand in certain segments remains weaker than expected but could not be fully offset by strong demand for mobile devices as well as corporate IT spending. On mom basis, chips sales fell by 1.4% after gaining 1.8% in May.


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