Singapore’s Semiconductor-Led Manufacturing Recovery: 3 Tech Stocks to Buy in Recovery Wave

November 27, 2023

Great news for tech investors! In October, Singapore’s factory output rebounded and increased for the first time after 12 months of decline, mainly due to growth in the semiconductor sector.

Manufacturing output saw an increase of 7.4% year-on-year (yoy), with semiconductors leading the charge at a stunning 17.8% growth.

This signals a big opportunity for those looking to invest in tech stocks.

Let’s dive into 3 top tech companies on the Singapore Exchange (SGX) that are set to benefit from this upturn.

1. AEM Holdings

Despite weakness in its Q3 2023 earnings, AEM Holdings Ltd (SGX: AWX), a leading global provider of advanced semiconductor test solutions, is one of the key beneficiaries of the recovery in the semiconductor industry.

AEM’s Q3 2023 revenue fell 45.8% to S$111.7 million but still exceeded expectations, showcasing resilience and potential for recovery.

Net loss in the quarter was also significantly lower than anticipated, coming in at S$16.1 million, demonstrating the potential for a turnaround in the company.

On top of that, AEM is also well-positioned to benefit from the expanding generative AI wave, especially in the data centre and edge computing sectors.

During 9M 2023, AEM has taken proactive measures to cut operating expenses by 25%, indicating a strong focus on operational efficiency and cost management.

Keep an eye on them for strong orders from their major clients and new customer acquisitions.

2. UMS Holdings

Specialising in precision engineering and equipment manufacturing, UMS Holdings Limited (SGX: 558) has a strong presence in the semiconductor industry.

With the anticipated recovery in the semiconductor industry, UMS Holdings has indicated a positive outlook for FY2024, while earnings have also exceeded expectations during 9M 2023.

In Q3 2023, they nailed their revenue and net profit targets, thanks to good cost control and some tax benefits.

They are also growing their customer list, which could mean more business and new projects, like their exciting Penang plant.

3. Venture Corp

Venture Corporation Limited (SGX: V03), a leading global provider of technology products, services, and solutions, is another tech stock in Singapore to watch amidst the turnaround in the semiconductor industry.

During 9M 2023, Venture Corp managed to maintain its profit margin level despite a yoy decline in revenue, indicating effective cost control and operational efficiency of the management.

Looking ahead, Venture Corp is expected to see a resumption in earnings growth in 2024, driven by new products and increasing demand in life sciences and industry.

This prospective growth makes it an attractive investment​​.

Aside from that, Venture Corp also offers a substantial dividend yield of 6.28% and has a strong net cash position with minimal expected capital expenditures.

This financial stability is appealing for investors seeking regular income​​.

Tech’s time to shine

These three SGX-listed tech wonders – AEM Holdings, UMS Holdings, and Venture Corp – are perfectly positioned to ride the semiconductor wave.

With their smart strategies, strong performance, and exciting growth prospects, they are poised to tap into Singapore’s tech rebound.

However, investors should always be mindful of the inherent risks and conduct thorough research before diving in.

It is also important to ensure that these stocks align with your investment portfolio and objectives.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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