We turn more bullish on Frencken (SGX:E28)’s earnings from more robust growth outlook, strong economic fundamentals in Malaysia and Singapore, and supported by firm 2026 growth prospects from its key customer ASML.
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Firm growth outlook for the sector and key customer ASML.
Based on SEMI’s forecast, global sales of total semiconductor equipment by OEM manufacturers are expected to touch US$133bn in 2025 (+13.7% y-o-y), reaching US$156bn in 2027 and growing at an 8% CAGR over the next two years. The wafer fab equipment segment has been estimated to grow at 11% y-o-y to US$115.7bn in 2025, and projected to grow at 8% CAGR to US$135.2bn in 2027.
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Positive external macroeconomic outlook for Malaysia.
Our RHB Economics team is of the view that tariff risks will ease, supporting global trade and demand, fuelling a more positive manufacturing and export outlook. Our economist forecasts Malaysia’s 2026 GDP growth to remain strong at 4.7%, from 4.9% in 2025. The team expects accelerating 2026 Industrial Production Index (IPI) at 4.1%, from 3.6% in 2025, contributed by domestic and global growth, including technology upcycle demand for E&E. The team also estimates Malaysia’s exports to grow at 9.3% in 2026, outpacing 6.5% in 2025, based on strong global demand as well.
In addition, our Singapore economist expects full-year industrial production to grow at 4.0% in 2026, benefitting from firmer electronics and non-electronics exports, positive spillover from the ongoing global electronics upcycle, and resilient regional demand.
Raise earnings and target price on buoyant outlook.
Read more at SGinvestors.io.
Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
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