Quick take: Unisem jumps 10% on earnings beat

  • Stock on the Move
  • Tuesday, 04 Aug 2020

KUALA LUMPUR: Shares in Unisem (M) Bhd jumped over 10% in early trade Tuesday after reporting a more than doubled earnings in the second quarter ended June 30.

The semiconductor manufacturer rose 10.34%, or 33 sen to RM3.52, its highest in 21/2 years.

Unisem’s net profit for the second quarter ended June 30 more than doubled to RM33.95mil from RM14.45mil a year ago.

Its revenue rose 10.3% to RM310.08mil compared with RM281.12mil in the previous year’s corresponding quarter.

For the six-month period, its net profit increased 51.7% to RM31.12mil from RM20.51mil, while revenue jumped 3.7% to RM565.24mil against RM544.96mil a year ago.

RHB said Unisem’s 1H20 core earnings of RM35.1mil comprise 49.3% and 50.2% of the house and street full-year estimates.

“We deem the results ahead of expectations,as 2H20 is expected to post similarly strong results. The significantly better-than-expected margin and strong orders are the main variants, despite the pandemic disruption. The recovery in margin post-Batam disposal and cost-saving initiatives supported the strong earnings,” it said.

RHB has upgraded Unisem to buy from neutral with a new target price of RM3.72 from RM2.

The research house said Unisem’s 1H20 results were a positive surprise,mainly on a better margin and strong topline following the closure of its Batam plant.

“We expect similarly strong loadings in 2H20,on the sustained orders pipeline. We also impute higher sales and margin assumptions, leading to higher F20F-22F earnings.

“Our TP is now based on 25x FY21F P/E (from15x)–in view of improved optimism, strong results, and the liquidity-driven P/E re-rating of the sector,” RHB said.

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