Monday 7 May 2012

Unisem - At the bottom of the down-cycle?


Period    1Q12

Actual vs.  Expectations
1Q12 revenue of RM256.6m accounted for 21.5% of the consensus’ full year estimate of RM1195.7m. However, the bottom line continued to see red ink with a loss of RM13.5m vs. the street’s full year net profit forecast of RM52.4m.

Dividends   No dividend was announced during the quarter.

Key Result Highlights
YoY, the revenue was lower by 12% to RM256.6m due to lower contribution from the Asia (-12%) and Europe (-28%) segments. The bottom line fared worst, recording a net loss of RM13.7m as compared to a net profit of RM5.4m a year ago. The group’s 1Q12 net loss was mainly caused by a one-time retrenchment cost of RM5.7m (arising from an efficiency/redundancy exercise at PT Unisem) and higher depreciation charges. 

QoQ, the revenue was also lower by 6% while the loss before tax (LBT) widened to RM16.2m vs.  RM5.3m in 4Q11. The increase in the LBT during the quarter was mainly due to lower sales revenue and retrenchment costs. 

Outlook   

Getting better. The industry is expected to recover in 2H12 due to a higher consumer demand for electronic devices.  Management has earlier indicated that its 1Q12 earnings will continue to be in the red albeit hitting the bottom of the current semiconductor cycle. The group is expecting to see improved results from 2Q12 onwards based on our understanding. 

More detail updates on the company outlook will be provided by the company during a result briefing today. 

Change to Forecasts
1Q12 net loss of RM13m was far below the consensus estimate of a RM17m net profit in 1Q and full year profit forecast of RM52.0m. Hence, we believe market is likely to revise down its FY12 earnings estimate for Unisem post results. 

Rating  NOT RATED as we have yet to initiate coverage on the stock 
 

Valuation    Consensus TP is at RM1.47, implying a FY12 PER of 17.8x. 

Risks   
Foreign currency exchange rate.
Industry recovery may falter halfway.

Source: Kenanga

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