An­a­lysts see Unisem’s good mo­men­tum con­tin­u­ing

The Star Malaysia - StarBiz - - News -

PETALING JAYA: Af­ter reg­is­ter­ing a more than two-fold jump in net profit for the sec­ond quar­ter (2Q20) of 2020, an­a­lysts be­lieve the pos­i­tive mo­men­tum will con­tinue into the next two quar­ters for Unisem (M) Bhd.

Sev­eral broking houses have re­vised their earn­ings forecast for 2020 to 2022, up­graded their calls on the stock and the raised the target price.

Unisem shares rose to a high of RM3.56 a share, but closed the day at RM3.42, up 23 sen. RHB In­vest­ment Bank said the out­look for the sec­ond half was pos­i­tive as there was strong load­ing fore­casts from cus­tomers as the sec­tor was go­ing into the sea­sonal ramp-up pe­riod in the third and fourth quar­ters.

All this is be­cause there is strong de­mand in 5G, smart­phone, and data cen­tre re­lated prod­ucts.

Unisem is a global provider of semi­con­duc­tor as­sem­bly and test ser­vices.

Unisem net profit for 2Q20 jumped more than twofold to RM33.95 mil­lion, from RM14.45 mil­lion a year ago. This was driven by higher sales vol­ume and for­eign ex­change gains.

A re­port said global sales for semi­con­duc­tors rose by 5.1% in June to Us$34.5bil from Us$32.9bil a year ago on stronger growth in the Amer­i­cas but un­cer­tain­ties per­sist in the sec­ond half.

RHB also did cau­tion that po­ten­tial sup­ply or de­mand dis­rup­tions could still swing the load­ing. There was Rm81.7mil in cap­i­tal ex­pen­di­ture in­curred in first half of 2020, for ad­di­tional ca­pac­ity for the Chengdu and Ipoh fa­cil­i­ties.

On ex­pec­ta­tions of higher sales it raised earn­ings fore­casts for FY20-22 by 37.1%, 11.3% and 11.5%. It up­graded the stock to a “buy’’ with a target price of RM3.72 a share.

CSGCIMB, Midf Re­search and Ke­nanga Re­search also raised up­wards their fu­ture earn­ings es­ti­mates.

CSGCIMB up­graded Unisem from ‘re­duce’ to ‘add’ with a target price of RM3.65.

Midf target price is RM3.10 from RM1.90 pre­vi­ously and main­tains a “neu­tral’’ stand.

Ke­nanga main­tains “mar­ket per­form’’ with a higher target price of RM3 from RM1.80 a share pre­vi­ously.

Midf said “the group has per­formed ex­cep­tion­ally as the pro­duc­tion ac­tiv­i­ties re­sume post manda­tory con­trol or­der. Given the up­beat pro­duc­tion ac­tiv­i­ties and its ef­fort to main­tain a health­ier bal­ance sheet, we view that div­i­dend prospects are rather tepid at this junc­ture.’’

The group has also in­creased its bor­row­ings which would lead to higher re­pay­ment com­mit­ment, it adds.

Ke­nanga be­lieves the risks to its call is stronger-than-ex­pected US dol­lar to the ring­git, faster-than-ex­pected adop­tion of 5G, and a res­o­lu­tion of the US China trade war.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.