UNISEM (M) BHD
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.”