PETALING JAYA: UWC Bhd
’s proposed private placement of up to 5% of its issued shares is expected to strengthen its financial position and support its transition to full wafer fabrication equipment (WFE) manufacturing.
Phillip Capital Research is positive on this exercise as the proceeds will fund UWC’s transition to full equipment manufacturing for its new US WFE customer, which is expected to generate RM70mil to RM100mil in revenue in the first year.
“The proceeds have been earmarked for capital expenditure to expand its Batu Kawan manufacturing facility with a new 620,696 sq ft factory (RM200mil); working capital for purchase of materials and staff costs (RM100mil); and repayment of bank borrowings (RM80mil).
“Upon completion, UWC’s net cash position is expected to strengthen to RM361mil (from net debt of RM19mil), providing ample financial headroom to execute on the broadening WFE opportunity.
“The exercise is expected to dilute our financial year 2027 (FY27) to FY29 earnings per share by 3% to 6% after factoring in higher interest income from annual RM4mil interest savings,” the research house stated.
Phillip Capital Research maintained its earnings per share (EPS) forecasts pending the completion of the proposed corporate exercise. It reiterated its “buy” call for UWC with a target price of RM8.70 a share, based on 51 times FY27 EPS.
“Key re-rating catalysts include faster-than-expected FE customer ramp-ups, new WFE contract wins, and stronger order book replenishment.
“Key downside risks include a stronger ringgit, recession risks affecting global industry capex, and weaker-than-expected order momentum,” it said.
