Worst is over for Thailand’s electronics sector, says UOBKH 

UOB Kay Hian (UOBKH) is turning more positive on the Thai electronics industry given the recent rebound in second-quarter financials reported by companies under its coverage, as well as “increasingly evident” signs of a semiconductor industry recovery. 

The brokerage on Wednesday (Sep 6) upgraded its sector rating to “market weight” from “overweight” as its analysts believe the worst has already passed.

In their view, the share prices of electronics companies have already absorbed a significant portion of headwinds, such as high raw material prices and weaker semiconductor demand. 

The analysts noted that the year-on-year decline in semiconductor sales in June was “significantly less severe” than in the previous month. 

“Given these trends, it appears that the industry’s correction phase may be nearing its conclusion.” 

A projected surge in the sale of products such as smartphones and personal computers would bode well for the electronics sector, they added.  

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

UOBKH however maintained its “hold” calls on electronics manufacturers KCE Electronics and SVI amid ongoing concerns such as currency fluctuations and raw material prices. 

Hana Microelectronics was downgraded from “buy” to “hold” considering limited upside to its share price, which already accounted for better-than-expected Q2 results, said the brokerage.

Despite Delta Electronics’ strong quarter of net profit and earnings growth as well as expected improvement in H2, UOBKH maintained its “sell” call on the stock as it deems the Thai unit’s valuation “too high” when compared with its listed parent company in Taiwan. 

“As we look ahead to H2 2023, while a robust recovery may not be immediately evident, we anticipate a gradual improvement in the outlook with the easing of many headwinds,” said the analysts, who expect Thailand’s electronics sector to improve further in 2024.