Key presumption – If MYR weakens against USD, semiconductors players are expected to do better (due to better export sales?) and vice versa.

Since USD is on a weakening path, what should we expect of Malaysian-listed semiconductor players such as Unisem and MPI? 

TimeSeries.png

Unisem

Strictly for illustrative purposes only

Movements in share price of Unisem can be largely explained (~65%) by the movements in USDMYR exchange rate. As shown in the regression analysis, the current share price of RM3.30 is relatively higher than forecast share price of RM2.41 (based on current exchange rate of USD/MYR 3.9573). Although the current share price is within the 95%-confidence interval range, the current share price approximates the 95%-upper band level of RM3.39. Does this mean that there is potential room for downside bias? Again, it will depend on how much more can the Ringgit strengthen against the USD or how much more can USD weaken against its major currencies?

Unisem.png

The timeframe for the above analysis : Jan 2011 – Jan 2018

MPI

Strictly for illustrative purposes only

If compared to Unisem, MPI has higher r-square of 69.4% in respect of its relationship with the exchange rate. MPI has a lower forecast price of RM8.05 (if compared to actual current price of RM11.80. Nevertheless, MPI’s current actual price is higher than the upper band of 95%-confidence interval (i.e RM11.60). Similar to Unisem, MPI may potentially have downside bias should the Ringgit continue to strengthen against the USD.

MPI.png

The timeframe for the above analysis : Jan 2011 – Jan 2018

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