Unisem’s 4Q results stronger than expected
KUALA LUMPUR: Unisem (M) Bhd (Unisem) has surprised analysts with its stronger earnings performance in the fourth quarter of financial year 2014 (4QFY14).
In its posting on Bursa Malaysia, Unisem announced that for the quarter ended December 31, 2014, the group achieved net profit of RM21.276 million in the current quarter as compared to net loss of RM93.124 million incurred a year ago.
For the financial year ended December 31, 2014, Unisem achieved net profit of RM67.75 million as compared to net loss of RM109.289 million in the corresponding financial year ended December 31, 2013.
According to the research arm of CIMB Investment Bank Bhd (CIMB Research), management is guiding for eight per cent revenue growth in FY15, higher than the 4.8 per cent in FY14.
“We believe this is reasonable given that industry research groups are still expecting semiconductor industry sales to grow by six to seven per cent in FY15,” CIMB Research said.
Moreover, it noted that Unisem should benefit from robust demand in smartphone devices due to the group’s exposure to
We believe this is reasonable given that industry research groups are still expecting semiconductor industry sales to grow by six to seven per cent in FY15.
communication components such as RF switch, MEMS sensor and Wifi modules.
Nonetheless, management is guiding for a sequential revenue decline of between zero to five per cent in the first quarter of 2015 (1Q15), which is in line with the research arm’s expectation given the seasonal weakness in demand and shorter operating days.
Nevertheless, CIMB Research expects Unisem’s performance to pick up from 2Q15, driven by a recovery in demand and expansion in the group’s bumping and waferlevel chip scale package (WLCSP) production capacity.
With management guiding for minus five to minus 10 per cent quarter-on-quarter revenue growth for 1Q15, this in RHB Research Institute Sdn Bhd’s (RHB Research) view, could po- tentially be mitigated by continued strength in US dollar against ringgit.
The research house further noted that the group reaffirmed its near-term focus on the wafer level packaging and bumping business, which makes up 28 per cent of its 4Q14 sales (21 per cent in FY13).
“Sales to the communication sector made up 32 per cent of its revenue in 4Q14 (28 per cent in FY13), while contributions from its consumer and auto segments registered at 25 per cent (27 per cent in FY13) and 17 per cent (15 per cent in FY13) respectively,” it added.
RHB Research has upgraded its FY15F-FY16F earnings per share (EPS) by 3.3 to 6.6 per cent as it updated its model following the release of Unisem’s full-year results.
It noted that key risks are the strengthening of ringgit against US dollar, higher raw material costs and a slowdown in the semiconductor market.
Nonetheless, RHB Research downgraded its call to ‘neutral’ due to limited upside.
It cautioned that the group’s outstanding 168.5 million warrants (currently out-of-money at an exercise price of RM2.18 and to expire by August 24, 2015) could potentially witness some conversion interests should the current uptrend in share price persist.
“Assuming full conversion, Unisem’s share base would increase by 25 per cent to 842.7 million with a corresponding dilution in our EPS estimates,” it said.
CIMB Research