PETALING JAYA: UWC Bhd
’s onboarding of its new full-assembly wafer fab equipment (WFE) and its broadening key front-end (FE) ramp will likely continue to drive earnings in the future.
In a report, Phillip Capital Research said the new US-based WFE customer is expected to command a higher average selling price of US$1mil per unit, reflecting the higher value-added nature of full equipment assembly work.
According to the research house, the customer only contributes between 3% and 4% to UWC’s order book but after this, will generate RM70mil to RM100mil of revenue in its first year.
“The current RM350mil order book is split 50:50 between FE and back-end (BE) customers, with FE expected to rise to about 70% by the end of financial year 2027 (FY27).
UWC’s largest FE customer, which consists of the other 30% of its order book, is guiding strong growth next year, requesting UWC to add capacity and manpower to support that ramp,” Phillip Capital said.
As for its BE output, the research firm said that output has increased to 25 units from 20 units in the second quarter of 2026, though management noted output could potentially exceed 30 units but is constrained by FE loading taking priority on shared capacity.
“Separately, system-level tester volumes have ramped strongly to 50 to 60 units per week across three models driven by preparations for an upcoming customer chip and fab launch,” Phillip Capital Research noted.
To support all these, UWC targets a 40% incremental capacity.
Additionally, Phillip Capital Research said it will maintain its earnings forecast and keep the “buy” rating it had on the stock.
“We’ve put a 12-month target price of RM8.70 on UWC based on unchanged 51 times FY27 earnings per share (EPS).
“However, key downside risks include a stronger ringgit, recession risks affecting global industry capital expenditure, and weaker-than-expected order momentum.”
Meanwhile, CGS International (CGSI) Research said the precision engineering group’s fourth quarter of FY26 of RM35.2mil represented 101% of both its and Bloomberg consensus estimates.
Margins for the quarter had also expanded to 18.9%, driven by a more favourable product mix and improved operating leverage.
Furthermore, CGSI Research pointed out since the launch of Meta Muse, there could be a new wave of demand for central processing units (CPU) given that headless browsing and high frequency application programming interface orchestration workloads are typically executed on CPUs.
“Both CPU and digital signal processing will compete with artificial intelligence accelerators for TSMC capacity, suggesting that further capacity expansion by TSMC is imminent.
Such expansion would require additional WFE spending to equip new fabrication capacity, ultimately benefiting UWC’s customers, in our view.”
With that, CGSI Research said it will reiterate “add” on the stock for its strong growth outlook, with an unchanged target price of RM9.31 – backed by a three-year EPS compound annual growth rate of 48% over FY26 to FY29F.
“We believe this is justified by UWC’s strong growth outlook, supported by its high-quality customer base across WFE and BE testing.”
