Unisem to regain upward momentum in 2Q13 with recovering demand
KUCHING: Unisem ( M) Bhd ( Unisem) is expected to regain its upward momentum from the second quarter of 2013 ( 2Q13) onwards, driven mainly by improvements in demand which has begun to show traction since March 2013.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said in a recent research note, the management of Unisem had indicated that demand had started to recover from March 2013.
“This had cushioned the revenue decline in 1Q13. Management also indicated that the traction may continue into 2Q13,” the research firm highlighted.
To recap, Unisem posted a surprising loss after tax of RM10.3 million in 1Q13. MIDF Research attributed this loss to the revenue decline of 2.7 per cent year on year (y- o-y) to RM249.7 million experienced in the quarter.
Additionally, it opined that Unisem’s 1Q13 result was a blip as the fall in revenue was due to soft demand during January and February especially in China.
Apart from the improvements in demand, the research house outlined that there could be a slight lag effect between Unisem’s and industry’s performance.
“Global semiconductor sales had registered four consecutive month of growth until February 2013 and the book-to-bill ratio for North America semiconductor equipment has been above parity since the start of the year,” it explained.
Meanwhile, the research firm noted that Unisem’s recent implementation of higher analog signal processing (ASP) was expected to impact the group from 2Q13 onwards.
It said, “Although the higher ASP was imposed on January 1, 2013, management indicated that the full benefit can only be felt in 2Q13.
“This is due to the fact that its older package customer required several months lead time to adjust to the higher ASP.
“Hence, impact of higher ASP in 1Q13 was not as significant as we first expected. Nevertheless, this should improve in 2Q13 onwards.”
On the other hand, MIDF Research said for 1Q13, Unisem posted strong revenue for its wafer level ( WL) packaging and bumping products as revenue for the segment grew 78.4 per cent y- o-y to RM52.2 million.
“This moderated the slower demand for its leaded, leadless and test services, which fell 15.6 per cent y- o-y, 9.9 per cent y- o-y and 14.6 per cent y- o-y to RM78.4 million, RM81.7 million and RM37.5 million respectively,” it elaborated.
The improvement on its new business model, meanwhile, the research firm noted was still ongoing and was expected to see an improvement to its revenue and margin in the coming quarters.
“We understand that Unisem has pruned and discontinued old products while emphasising on growth products.
“Headcount has been trimmed further to 7,976 by end March 2013 from 8,085 in 4Q12 and 9,069 in 1Q12,” it added.
Meanwhile, MIDF Research noted that Unisem would continue to focus on growth areas, namely WL chip scale package ( WLCSP), bumping, microelec tromechanical systems ( MEMs), flipchip and quad flat no-lead (QFN).
“We believe that revenue will rebound in the coming quarters and when demand improves, the ramp-up can be drastic.
“For example, 2Q09 revenue jumped 41.3 per cent quarter on quarter. All considered, we believe that FY13 will be a better year,” MIDF Research remarked positively.
As such, it pegged the target price at RM1.08 per share, derived from earnings per share 2013 to 13.8-fold price earnings ratio.