PETALING JAYA: UWC Bhd
is entering a firmer earnings upcycle, as stronger front-end semiconductor orders begin to add meaningfully to its established back-end business, says Hong Leong Investment Bank (HLIB) Research.
This has prompted the research house to raise its target price to RM5.60 from RM4.85 while maintaining a “buy” call.
The research house said momentum is becoming clearer heading into the second half of calendar year 2026, supported by accelerating volume from key front-end customer, Customer L, and improving demand from major back-end clients tied to memory, CPU and test equipment markets.
In the first half of financial year 2026 (FY26), Customer L contributed RM75mil to RM85mil, or about 30% to 35%, of group revenue, already tracking ahead of management’s full-year guidance of RM100mil to RM120mil.
HLIB Research said this reflected stronger-than-expected loading at the customer’s Malaysian operations as wafer fabrication equipment or WFE demand continues to improve across Asia.
HLIB Research noted discussions on pricing rebates of 5% to 10% if annual orders exceed US$50mil could indicate stronger long-term commitment, with order value potentially reaching as high as US$60mil to US$80mil. The bank has lifted its revenue assumptions for Customer L to RM160mil for FY26, RM198mil for FY27 and RM238mil for FY28.
Another upside catalyst is UWC’s engagement with a US-based front-end customer, Customer A, where the group is setting up a standalone facility.
Management indicated the order potential could be comparable with Customer L, although HLIB Research is maintaining its current RM36mil to RM80mil revenue assumptions, pending clearer visibility in the second half of 2026.
