Friday 9 November 2012

Unisem 3Q12 – A positive reversal?


Period    3Q12/9M12


Actual vs. Expectations    The group’s 9M12 revenue of RM822.5m came in within expectations, accounting for 70.8% and 72.9% of ours and the consensus’ full year estimates respectively.

However, the group continued to suffer losses for the first nine months amounting to RM12.8m
despite netting in a net profit of RM8.3m for 3Q12.


Dividends    No dividend was announced during the quarter.


Key Result Highlights    YoY, the 9M12 revenue dropped by 7.3% on the back of lower ASPs arising from changes in product mix across its Asia (-6.9%) and Europe (-42.5%) segments 9M12 EBIT marginally broke even at RM0.3m (-99.0%) due to a one-time retrenchment costs of RM5.7m in 1Q12, higher depreciation charges and lower forex gains.

QoQ, the 3Q12 revenue growth remained flattish as robust revenue growth from its USA segment
(+67.9%) was offset by lower a revenue at its Asia segment (-24.0%) and a flat revenue growth in its
Europe segment. On the positive side, the group recorded an EBIT of RM14.6m, a huge reversal
compared to the previous EBIT of -RM3.1m on the back of lower depreciation and amortisation as well
as forex gains of RM2.0m.


Outlook    According to SIA, although global semiconductor sales inched up by 1.8% QoQ, on a YTD basis, the sales still lagged by 4.7% as compared to the same period last year due to the lingering economic
headwinds. We believe that the prevailing global economic uncertainties will continue to affect the
earnings and growth visibility of the semiconductor and HDD industries.

As the group is highly dependent on the semiconductor and HDD industries, which are generally cyclical in nature, we remain cautious on the company’s outlook.


Change to Forecasts    We are maintaining our earnings forecast pending more details from today’s results briefing.


Rating    Maintain MARKET PERFORM


Valuation    We maintain our TP for now. Our current TP of RM1.32 is based on a FY13 forward PBV of 0.8x.


Risks   Foreign currency exchange rate.
The industry’s recovery may falter halfway.

Source: Kenanga

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