Quick take: Unisem shares drop on earnings miss

KUALA LUMPUR: Shares of Unisem (M) Bhd dropped marginally as the company reported a 21% dip in net profit for the third quarter ended Sept 30.

The semiconductor group declined 0.48%, or two sen to RM4.12. It has risen about 30% so far this year.

Unisem’s net profit fell 20.63% to RM40.27mil in the third quarter ended Sept 30, against RM50.74mil in the previous corresponding quarter on the back of lower revenue at its Ipoh operations.

Its revenue stood at RM366.36mil, up 2.4% from RM357.68mil in the same quarter last year.

The group also declared a dividend of two sen per share for the financial year ending Dec 31, 2021 (FY21), which will be paid on Nov 26.

For the nine-month period ended Sept 30, 2021, Unisem posted a net profit of RM140.32mil on revenue of RM1.14bil.

MIDF Research said Unisem’s 9MFY21 financial performance missed expectations, representing 60.7% and 64.9% of the house and consensus full year forecasts.

“With the reopening of the economy, we believe Unisem will likely ramp-up its output in 4QFY21 as the production activity of the manufacturing sector and workers availability normalised.

“We made no changes to our earnings estimates as we think it was a temporary setback for the group due to the MCO,” it said.

MIDF believed the group’s outlook would remain robust on strong demand across the products and services especially on wafer level packaging and micro-electro-mechanical systems (MEMs) bump.

“The ex-bonus target price is pegged to FY22 EPS of 18.2sen and PER of 27.4x which represents a slight premium to the company’s 2-year average rolling PER of 23.3x.

“We think strong demand across the products and services especially on wafer level packaging and micro-electro-mechanical systems (MEMs) justifies the valuation premium,” it said.

MIDF has maintained its “buy” call on Unisem with an unchanged target price of RM5.

TA Securities said Unisem’s 9MFY21 net profit of RM141 came below the house and consensus full-year estimates at 61.5% and 64.6%, respectively.

“We have cut our FY21 earnings estimates by 12.7% to RM199.9mil upon lowering sales for the period by 4.7% to reflect actual 3QFY21 results,” it said.

TA Securities has maintained its “buy” call on Unisem but lowered its target price to RM5.85 from RM5.90 previously, based on a PE multiple of 35.0x against CY22 EPS.

“We view the sequential weakness in 3QFY21 as just a temporary blip. We remain sanguine on Unisem’s growth prospects, which we expect to be underpinned by its strong order visibility, expansion plans to capitalise on robust chip demand, as well as an established and strategic presence in China,” it added.

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