PETALING JAYA: Unisem (M) Bhd
is gearing up for recovery in growth amid improving fundamentals, say analysts.
The chip packing and testing group recently posted a net profit of RM19.38mil for the third quarter this year (3Q25), on the back of RM492.74mil in revenue.
In a report, Kenanga Research said, “Unisem’s management is guiding for up to 5% quarter-on-quarter revenue growth in US dollar terms for the coming quarter, with a bias to the upper end given the ongoing upcycle.
“October also ran at full tilt on urgent orders, with several programmes at near-optimal loads despite China’s Golden Week holiday.”
Heading into next year, Unisem expects the upcycle to persist driven by demand related to artificial intelligence and peripherals, with operating leverage supporting faster bottomline growth than revenue.
Unisem’s new plant in Gopeng, Perak is slated for significantly higher output by early next year as the programme ramps up the scale of centralised testing.
Separately, on the merger between analogue and mixed-signal chipmaker Skyworks Solutions Inc and radio frequency and Internet of things chipmaker Qorvo Inc in the United States, Kenanga Research said that Unisem’s management noted both are long-standing top-tier customers.
“Unisem’s management views the deal as neutral to mildly positive given its relationships and overlapping product portfolios.
“It also expects the combined entity to pursue accretive execution, which if realised should be incrementally beneficial to Unisem’s loading and continuity of programmes,” the research house said.
Kenanga Research has trimmed the group’s net profit forecast for this year by 5% to RM58mil after lowering other income assumptions.
It also raised next year’s net profit forecast by 21% to RM104mil on higher turnover and gross profit margin assumptions.
Kenanga Research has maintained an “underperform” call on the stock, but raised its target price by 21% to RM1.90 from RM1.56 previously.
MBSB Research also expects a turnaround for Unisem moving forward.
Unisem finally posted better year-on-year quarterly performance in 3Q25 after a long series of year-on-year quarterly earnings contractions, it said in a recent note to clients.
“This signals that the fundamentals have improved although we view that the pace of recovery is uneven across its operations.
“While contributions from Chengdu, China, continue to soar, the Ipoh operation remains in a loss-making position. This also led to minimal improvement in profit margin,” MBSB Research said.
The group’s net debt position has shown a notable increase as it continues to gear up to position itself for future growth.
Based on the group’s performance and outlook after Unisem’s results briefing, the research house said it has upgraded its earnings forecasts for Unisem from this year to 2027 by between 19.3% and38.5%.
The research house has kept a “sell” call on the stock, but revised its target price higher to RM2.66 from RM1.54 previously after Unisem’s 3Q25 results.
Meanwhile, CIMB Research said Unisem’s recovery had already been priced in, with its results for the nine months of this year broadly in line with expectations at 60% of its full-year forecast, but slightly below consensus estimates.
The research house raised its earnings per share forecasts for next year and 2027 by 8% and 20%, respectively, expecting stronger operating leverage as the Gopeng plant’s utilisation ramps up in the second half of next year.
CIMB Research also raised its target price to RM3.20 as it rolled over its valuation to end-2026, pegged to a higher 34 times price-earnings multiple to reflect the improving outlook in the tech sector.
However, the research house maintained a “reduce” rating on the stock due to its demanding valuation and execution risks related to the production ramp-up for next year.
“In our view, any shortfall in execution or margin delivery could pose downside risks to the share price,” it noted.
Potential catalysts for the stock include a higher customer take-up rate for the Gopeng plant, new customer wins driven by global supply chain shifts, and a higher dividend payout.
