MAYBANK IB MAINTAINS POSITIVE STANCE ON ELECTRONICS MANUFACTURING SERVICES SECTOR

KUALA LUMPUR, April 28 (Bernama) -- Maybank Investment Bank Bhd (Maybank IB) has maintained its “positive” stance on the electronics manufacturing services (EMS) sector amid persisting tariff uncertainties.

The investment bank said Malaysian EMS players remained well-positioned to benefit from the ongoing US-China trade war and the recently announced blanket tariffs on the rest of the world, reinforcing Malaysia’s attractiveness as a manufacturing base compared to China.

“A potential easing of global tariffs and a likely US Federal Funds Rate cut in 2025 could catalyse a rotation back into growth names,” Maybank IB said in a research note today.

The investment bank said the tone on the ground remains largely “business as usual” after meeting with EMS and metal fabricators in Penang.

Some EMS players appeared well-positioned to benefit from current headwinds while businesses tied to global semiconductor capital expenditure (capex) may face near-term challenges, Maybank IB said.

“While we remain positive in the tech-EMS space, we prefer names with diversified operations or strong product stickiness to weather current uncertainties,” it added.

Maybank IB said concerns over tariff absorption are believed to have largely been addressed, with most customers expected to bear the cost, although partial cost-sharing may still be likely.

“That said, corporates flagged potential production declines for newer products, and particularly products caught in the US-China tariff crossfire, or delayed due to the global capex cycle.

“While near-term earnings remain supported by existing operations, short-term growth could be constrained by a slowdown in new product launches and global capex initiatives,” it added. 

Maybank IB said corporates on the ground remain optimistic on the ongoing China+1 diversification trend and are now flagging the emergence of a Vietnam+1 strategy, following Vietnam's exposure to some of the highest tariff rates among ASEAN peers during the initial phase.

“Encouragingly, several companies also highlighted positive progress in onboarding new customers amid the ongoing trade tensions, suggesting longer-term tailwinds despite near-term cautiousness.

“Players such as Aurelius Technologies Bhd, with available capacity, stand to benefit most from this trend,” it added.

-- BERNAMA