UNISEM (M) BHD

The Star Malaysia - StarBiz - - Analyst Reports - By AmIn­vest­ment Bank Re­search Ac­cept of­fer (main­tained) Fair value: RM2.50

AMIN­VEST­MENT Bank Re­search is main­tain­ing its “ac­cept of­fer” rec­om­men­da­tion on Unisem at the of­fer price of RM3.30 per share, which rep­re­sents a 32% up­side from its fair value of RM2.50 per share.

The re­search house said its val­u­a­tion is pegged to a 2019 price-to-earn­ings ra­tio of 14 times.

“We keep our earn­ings pro­jec­tions un­changed,” it said.

The re­search house said it came away from Unisem’s third quar­ter 2018 brief­ing, learn­ing that its fourth quar­ter earn­ings will not see any sur­prise as the man­age­ment guided a flat quar­ter-on-quar­ter growth.

“With con­cerns sur­round­ing the US-China trade war with re­gard to tech­nol­ogy dis­pute and a less favourable global mar­ket con­di­tion, sev­eral of its cus­tomer re­lat­ing to power chips and In­ter­net of Things play­ers are car­ry­ing out in­ven­tory ad­just­ments by hold­ing off from plac­ing or­ders un­til the very last pos­si­ble minute.

“Our earn­ings fore­cast has taken into ac­count the flat growth in the fourth quar­ter.”

In terms of prod­uct break­down (in dol­lar terms), AmIn­vest­ment Bank said the con­sumer and au­to­mo­tive seg­ment con­tin­ued to ex­pe­ri­ence growth, record­ing a climb of 3% and 2% re­spec­tively due to in­creased com­plex­ity in semi­con­duc­tor con­tent.

It added that the PC and com­mu­ni­ca­tion seg­ment saw mar­ginal de­cline of 4% and 2% re­spec­tively, owing to ta­per­ing de­mand.

“Mean­while, the in­dus­trial seg­ment re­mained flat,” said the re­search house.

Mov­ing into the fourth quar­ter, AmIn­vest­ment Bank said Unisem ex­pects the au­to­mo­tive seg­ment to con­tinue grow­ing, al­beit at a grad­ual pace.

“This would trans­late into more fan-out wafer-level pack­ag­ing jobs for sev­eral new prod­ucts. The group is also ex­pected to ramp up the pro­duc­tion of MEMS mi­cro­phones used for voice recog­ni­tion.

“With the new dual-ca­pa­bil­ity (8-inch and 12-inch) bump­ing fa­cil­ity in Ipoh com­pleted, it is ex­pected to in­crease Unisem’s bump­ing ca­pac­ity from circa 20,000 wafers per month to 27,000 wafers per month, and po­ten­tially raise av­er­age sell­ing prices given 12-inch wafers com­mand two-times the pric­ing of eight-inch wafers.”

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