Kenanga Research said the “stars are aligning” for UWC, with the semiconductor segment set to anchor the group’s next leg of growth.
PETALING JAYA: UWC Bhd
’s semiconductor segment earnings are expected to remain robust in financial year 2026 (FY26) and FY27 amid potential downside risks, says Kenanga Research.
This would be supported by its front-end and back-end customers, which would see the ramping up of back-end activity complementing its front-end demand.
The research house said the “stars are aligning” for UWC, with the semiconductor segment set to anchor the group’s next leg of growth, underpinned by strengthening contributions from both its front-end and back-end exposures.
“On the front-end, we are holding to the view that the wafer fab equipment (WFE) upcycle remains at an early stage.
“Despite record-high fab capital expenditure announcements, much of the spending so far has been directed towards infrastructure rather than equipment with 2025 WFE outlays only returning to 2023 levels,” the research house said in a report.
It said the recovery from the recent trough by 27% versus the typical 65% seen in prior cycles, suggested significant room for further upside, benefiting UWC through its involvement in critical WFE subsystems.
“On the back-end, we expect higher orders going forward, as UWC’s key customer ramps its new manipulator for next-gen testers from end first quarter 2026 (1Q26), supported by rising test intensity driven by artificial intelligennce (AI) applications.
“We raise our FY26 and FY27 forecasts revenue by 7% and 13%, reflecting a stronger-than-expected production ramp by its key back-end customer in the semiconductor space underpinned by robust end-market demand from AI,” it said .
This is supported by Nvidia Corp’s 3Q guidance, which confirms a multi-year AI investment cycle (about US$600bil a year currently, with long-term potential of US$3 trillion to US$4 trillion per year), as well as AI-related test demand remaining strong across compute, networking, and memory segments.
Correspondingly, the research house is lifting net profit forecasts for FY26 and FY27 by 12% and 20% respectively, driven primarily by the higher revenue trajectory and operating leverage as loading increases. It also raised its target price for UWC to RM4.38 from RM3.82 per share.
Meanwhile, Hong Leong Investment Bank (HLIB) Research expected UWC’s earnings momentum to strengthen, underpinned by continued volume ramp-up from key front-end and back-end customers.
It said this is evidenced by its latest order book, which has increased to RM200mil from RM180mil a quarter ago.
