KUALA LUMPUR, The ongoing rally on the Nasdaq, fuelled by surging interest in artificial intelligence (AI), has sparked increased attention from local investors toward Frontken Corp Bhd, according to Hong Leong Investment Bank (HLIB) Research.
The investment bank noted that major global tech giants like NVIDIA, Advanced Micro Devices (AMD), and Google have experienced significant gains in their share prices, driven by growing demand for AI processors and cloud computing services.
While most companies listed on Bursa Malaysia are not directly involved in the AI space, Frontken stands out as a key indirect beneficiary. This is largely due to its established cleaning and surface treatment services for leading semiconductor foundries in Taiwan, which remain its primary revenue source.
“Frontken utilises advanced technology to provide precision cleaning for extremely small wafers, supporting production at leading foundries,” HLIB said.
Looking ahead, global semiconductor sales are projected to rebound by 13% year-on-year (YoY) in 2024, according to forecasts from World Semiconductor Trade Statistics (WSTS).
Additionally, Taiwan Semiconductor Manufacturing Company (TSMC), during its Q4 2023 earnings call, signaled that earnings had likely bottomed out and expressed confidence in a strong growth outlook for 2024. This optimism is anchored by the expansion of leading-edge 3nm technologies, sustained demand for 5nm chips, and the continued growth of AI-related sectors.
HLIB highlighted that increased output from these foundries will drive demand for Frontken’s specialised services, particularly in supporting production processes and extending the lifespan of chamber components. “This positions Frontken as a prime beneficiary of growth in the front-end semiconductor industry,” it said.
Beyond semiconductors, Frontken’s oil and gas (O&G) division contributed approximately 23% of the group’s total revenue in the financial year 2023 (FY23). HLIB added that the company expects further momentum in FY24, backed by stronger orders from contracts related to engineering services, manpower supply, and mechanical rotating equipment servicing with major oil companies.
On the stock market, Frontken’s shares are currently trading between RM3.64 and RM3.70, continuing their upward trend.
“Should the share price break above RM3.74, it could climb further to RM3.87, RM4.00, or even RM4.10, forming a higher high pattern. However, investors are advised to cut losses if the price drops below RM3.50,” HLIB advised.
