- Global tech stocks now make up a quarter of global index benchmarks from a tenth a decade ago, highlighting the expanding role of technology.
- Global semiconductor sales are projected to grow, presenting opportunities for SGX-listed tech stocks.
- SGX companies like Aztech Global, Valuetronics, and ISDN are enhancing efficiency through innovative manufacturing processes.
Over the past decade, global tech stocks have seen significant capitalization growth, now making up a quarter of global index benchmarks, up from one-tenth, underscoring the expanding role of technology in our lives. For Singapore Exchange (SGX) investors, this means potential opportunities in tech stocks listed on the SGX, which could benefit from this global trend.
Venture Corporation Ltd (SGX:V03), Frencken Group Ltd (SGX:E28), and UMS Integration Ltd (SGX:558) are among the most traded tech stocks on SGX in the second half of 2024 (2H 2024). These companies averaged -10.6%, +7.5%, and +17.4% in 3, 5, and 10-year annualised total returns through to November 20.
Recently, AEM Holdings Ltd (SGX:AWX) became the third most traded tech stock after raising its revenue guidance for the second half of FY2024 (2HFY2024) by 18%, due to a key customer bringing forward some orders from FY2025.
Top 10 Most Traded SG Tech Stocks
Source: SGX and Refinitiv, data as of Nov 20, 2024.
Global semiconductor sales are widely projected to grow. However, in 2024, downstream electronics industries have experienced mixed performance due to cyclical factors causing a slower recovery. This has led multiple players in the value chain to focus on cost efficiency and optimization.
Stocks like Aztech Global Ltd (SGX:8AZ), Valuetronics Holdings Ltd (SGX:BN2), and ISDN Holdings Ltd (SGX:I07) are noteworthy. These companies offer integrated solutions encompassing technology design, manufacturing, testing, and packaging. Their products include Aztech’s IoT devices like security cameras, ISDN’s industrial automation systems, and Valuetronics’ transaction printers and sensing devices. Their engineering expertise and advancing technology enable them to continually offer innovative solutions to customers.
Key SG Tech Stocks to Consider
1. Aztech Global
- Innovative Pipeline: Aztech Global has a strong pipeline of new products, expanding its portfolio in third quarter (3QFY2024) with 10 new products in the communication, consumer, health-tech, and industrial segments, some of which are scheduled for commercial production from the fourth quarter (4QFY2024).
- Operational Efficiency: The company has implemented Manufacturing Execution Systems (MES) to automate workflows and enhance production processes, yields, transparency, and traceability.
- Future Plans: Aztech intends to enhance its design and manufacturing capabilities, diversify its customer base, and explore mergers and acquisitions (M&A) opportunities.
2. Valuetronics
- Market Confidence: Based on data by SGX and Refinitiv, Valuetronics is trading at a price-to-sales ratio of 1x, above its 5-year average price-to-sales multiple of 0.6, indicating strong market confidence.
- Revenue Diversification: The company generates 40% of its revenue from the US and 20% from China. In recent years, it has shifted its main revenue source from consumer electronics to industrial and commercial electronics.
- Future Plans: Valuetronics plans to seek new opportunities with existing customers and expand its customer base, leveraging its integrated manufacturing solutions in Vietnam to address evolving demands and geopolitical uncertainties.
3. ISDN
- Renewable Energy Expansion: ISDN is actively venturing into the hydro power and solar-energy sectors in Asia, with three hydropower plants now operating in North Sumatra.
- Operational Efficiency: ISDN’s MES focuses on efficient operational management, real-time production monitoring, augmented reality-based training, and supply chain agility.
- Future Plans: ISDN is positioned to capitalize on a cyclical recovery and long-term growth, bolstered by its core capability build-up during the downturn and rising demand for industrial automation.
As of 2023, Asia remains responsible for 70% of global electronics exports, with ASEAN’s share rising to 18%. Investing in SGX tech stocks like Aztech Global, Valuetronics, and ISDN offers promising opportunities due to their strategic initiatives, innovative growth, and market positioning.
However, investors should remain mindful of the risks associated with global trade downturns, semiconductor cycles, geopolitical tensions especially between major economies like the US and China, as well as economic conditions like inflation. By carefully evaluating these factors, SGX investors can make informed decisions to capitalize on the growth potential of these tech stocks.
Disclaimer: ProsperUs Manager of Content, Hailey Chung, does not own shares of any companies mentioned.
Reference
Recent Driving Forces in the Technology Sector – Singapore Exchange (SGX)
