Kenanga Research maintains ‘outperform’ rating on Oppstar
Oppstar Bhd’s collaboration with Samsung Electronics Co Ltd to produce industrial integrated circuits (ICs) will see investors paying premium valuations for IC designers with collaboration with semiconductor foundries.
Kenanga Investment Bank Bhd (Kenanga Research) said it was positive on Oppstar’s latest development as investors globally were willing to pay an average price-earnings (PE) ratio of 54 times for IC designers with collaboration with semiconductor foundries versus Oppstar’s financial year 2025 PE ratio of only 25 times as at March.
“Nevertheless, the latest development aside, we anticipate an upswing in Oppstar’s earnings (after a soft patch recently) on the back of the doubling of its order book to RM24.7 million (as of February) on recurring turnkey design jobs from existing customer Xiamen KirinCore, as well as the addition of orders from the recently-acquired design company in Japan,” it said in a note.
The access to wafer foundries transforms IC design houses like Oppstar into enablers, such as converting concepts into tangible products for fabless tech players including Nvidia Corp and Qualcomm Inc.
Kenanga Research has maintained an “outperform” call on the stock with a RM1.70 target price due to the substantial disparity in revenue size between Oppstar and its global counterparts.
It noted that demand for customised IC design was strong on the back of the proliferation of
Internet of things devices, autonomous vehicles and artificial intelligence applications.
Oppstar recently announced that its unit would work with Samsung to produce industrial ICs manufactured using Samsung 14-nanometer FinFET technology foundry process.
Its unit, Oppstar Technology Sdn Bhd, is a leading provider of custom-designed chip solutions.