PETALING JAYA: Analysts say their positive view on semiconductor assembly and test services provider Unisem (M) Bhd
remains anchored by the company’s growing exposure to key customer Monolithic Power Systems (MPS), which they estimate will account for more than 40% of revenue, supporting strong volume growth and a more favourable mix shift over the next 12 to 24 months.
Hong Leong Investment Bank (HLIB) Research said as utilisation at the Gopeng plant improves and Malaysia operations move past breakeven, it expects operating leverage to accelerate and drive a sharp earnings rebound at Unisem.
The research house noted Unisem’s third quarter ended Sept 30 (3Q26) core profit after tax of RM34.4mil fell short of expectations as a wafer shortage at its largest customer kept the Gopeng facility’s utilisation rate low at about 40%.
“Encouragingly, gross margin still widened and Unisem Malaysia is on track to break even in 4Q26,” it said.
It trimmed core earnings per share forecasts for the financial years ending Dec 31, 2026 (FY26) to FY28 by 13%, 9%, and 6% on a more gradual margin recovery assumption, while maintaining a “buy” call with a lower target price (TP) of RM4.85 a share.
“We view the slower recovery as a timing issue rather than a structural change to the investment case,” HLIB Research pointed out.
At last look, the stock traded at RM3.63.
MBSB Research is keeping a “neutral” recommendation on Unisem with an unchanged TP of RM3.91 a share.
Unisem recorded a better 3Q26 financial performance, supported by higher production activity across all its operations, MBSB Research noted.
“However, on a year-to-date basis, it still trails our expectations. The deviation mainly stemmed from the lower delivery of wafers from one of its main customers, as well as elevated staff costs.”
Moving forward, management is anticipating a gradual improvement in the shipment of wafers from its customer, it added, adding that Unisem is also seeking ways to manage heightened staff costs.
On another note, the group announced its first quarterly dividend of only one sen for FY26, adding that the lower dividend payment could be due to expected higher capital expenditure in the near term.
MBSB Research said that while it understands Unisem’s management is looking to reduce staff costs, it views any cost savings achieved as likely to be gradual.
“All in, we reduced our earnings estimate for FY26 by 32.3%”, it said.
“Meanwhile, FY27 and FY28 earnings estimates have been maintained at this juncture as we input a higher revenue contribution premised on the current revenue run rate,” MBSB Research said.
The revised revenue assumptions are expected to offset higher operational costs, and on this note, the FY27 and FY28 revenue assumptions have been revised upwards by 14.6% and 27% year-on-year.
