PETALING JAYA: Analysts expect positive prospects ahead for UWC Bhd
, underpinned by its strong order momentum from its key front-end (FE) and back-end (BE) customers.
Hong Leong Investment Bank Research (HLIB Research) said it expects the group to deliver robust earnings growth this year and next.
“On the FE side we continue to see strong double-digit growth in 2026 for customer L, supported by improving production yields which have now risen above 75% and should translate into better margin performance for UWC.
“Further upside could come from additional ramp-ups from other FE customers, which we see as a key upside potential,” the research house said.
For the BE segment, UWC stepped up shipments of memory test equipment to roughly 20 units each week for customer T, with volumes expected to increase further to 35 units per week by the middle of 2026 as qualifications for the next-generation test platform progress for an artificial intelligence graphics processing unit customer.
“Activities from its other BE customers have gained traction recently, which we believe should scale more meaningfully from financial year 2027 (FY27) onwards as this customer’s foundry and advanced packaging operations ramp up further.”
HLIB Research said it will reiterate a “buy” call on UWC with a target price (TP) of RM4.85 as the group positions itself to capitalise on the rising demand for advanced chipmaking tools.
Similarly, Phillip Capital Research maintained its “buy” call on UWC, stating that recent earnings were above expectations, backed by stronger second half (2H26) momentum from a pick-up in semiconductor orders.
UWC had recorded a profit of RM25mil on the back of RM136mil in revenue for the second quarter of 2026.
“FE contribution captured a larger share of semiconductor revenue at 40%, up from 35% in the previous quarter.
“Encouragingly, UWC’s order book rose for a fourth consecutive quarter to RM250mil, comprising 50% FE, 33% BE and 12% from the life science business,” the research house said.
Earnings before interest, taxes, depreciation, and amortisation margin expanded by six basis points year-on-year to 26%, lifting six month core profit for FY26 to RM46mil.
With that, Philip Capital Research said it will raise its FY26 to FY28 earnings forecasts by 4% to 6% to reflect stronger semiconductor order flows.
“Post earnings upgrade, our 12-month TP is higher at RM5.75 based on an updated price-to-earnings ratio (PE) of 47 times.”
Meanwhile, Kenanga Research said UWC’s six-month profit accounted for only 25% and 31% of its and consensus full-year estimates.
It noted that the shortfall was mainly due to unfavourable foreign currency movements affecting revenue derived in US dollar.
“Stripping out the foreign exchange impact, core net profit stood at RM48.4mil, which made up 40% and 50% of our and consensus full-year estimates.
“We consider the result largely in line, as we expect core earnings to gradually improve over the coming quarters, with stronger performance anticipated in 2H26,” it said.
Moving forward, the research house expects semiconductor contributions to remain robust.
Acknowledging that a weaker US dollar could impact margins, it trimmed FY26 and FY27 earnings forecasts by 19% and 13%.
“Nonetheless, we see potential for margins to expand once new FE customers begin ramping up orders, driven by improved economies of scale and yield enhancements.
“We raise our TP to RM4.70 after rolling forward our valuation base to FY27 forecast, while keeping our targeted PE unchanged at 33 times.”
