Unisem may post weak fourth-quarter performance

  • Business
  • Saturday, 19 Feb 2011

PETALING JAYA: UNISEM (M) BHD is expected to announce a weak performance in its fourth quarter ended Dec 31, 2010 (4QFY10), on lower sales and inventory adjustments.

However, the semiconductor firm is expected to post robust yearly growth in 2010.

OSK Research expects Unisem’s fourth-quarter results, due for release next Thursday, to mirror the performance of Malaysian Pacific Industries Bhd (MPI), with earnings growth on a possible declining trend.

MPI net profit dropped by 1.5% to RM25.3mil in second quarter ended Dec 31, 2010 from a year ago despite higher revenue for the quarter of RM367.6mil against RM346.6mil in the previous corresponding quarter.

“In the company’s analyst briefing on its third-quarter results, the management had provided guidance for a 10% quarter-on-quarter (q-o-q) drop in fourth-quarter revenue, mainly due to inventory adjustments.

“Unisem’s q-o-q earnings growth had also slipped from 35.9% since the fourth quarter ended Dec 31, 2009, to only 7.3% in the third quarter of 2010,” OSK said in a report yesterday.

Meanwhile, UOB Kay Hian said due to the softening in sales, the estimated 4QFY10 earnings of RM48mil should represent a 7% q-o-q drop.

UOB also warned of headwinds for the semiconductor industry due to swelling global inventories and moderating industry growth rates.

“In addition, the ramp-up in capacity undertaken by the industry last year could potentially cut back outsourcing demand from integrated device manufacturers.

“Global semiconductor inventories in the fourth quarter last year were at their highest level since the same quarter in 2008.

“Days of inventory rose to 83.6 days, or a 7% increase in the fourth quarter last year, from 78.1 days in the previous quarter,” according to iSuppli.

“These issues will pervade throughout 2011, and further dampen sentiment on back-end players,” it said in a report.

For the nine months ended Sept 30, 2010, Unisem recorded revenue of RM1.06bil and net profit of RM141.3mil, which represents growth of 47.3% and 446% respectively over the corresponding period a year ago.

The significant increase in revenue and net profit was attributable to improved sales volume from a broad-based demand for its services with a notable surge in the demand for its wafer bumping and Advanced Packaging services.

Despite the forecast of a weak 4QFY10, chairman and group managing director John Chia said 2010 had been a spectacular year; he was bullish on the prospects for this year.

“The industry has recorded a 30% year-on-year growth last year and we anticipate a single-digit growth this year. We should be able to end 2010 on a high note. The industry anticipates only a single-digit growth this year, which will still be considered a good year as it is based on very high growth in the previous year,” he said.

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