Thursday, July 25, 2013

Unisem suffers downgrades after 2Q results

Unisem suffers downgrades after 2Q results
Business & Markets 2013
Written by Ho Wah Foon of    
Thursday, 25 July 2013 14:38

KUALA LUMPUR (July 25): Unisem Bhd suffered downgrades by several research houses this morning after it produced another set of disappointing results and guided that outlook stays challenging.

Yesterday, the company announced that its second quarter to June 2013 (2QFY13) suffered a net loss of RM4.2 million on the back of lower revenue of RM246.9 million.

MIDF Equity, in a note today, said: “On the back of poor earnings performance, we are slashing our earnings estimate for FY13 and FY14 by 82.6% and 46.7% respectively to be at the conservative end.

“With the lower earnings forecast, our target price has been reduced to RM0.62… We expect customer sentiment to remain subdued on the back of weary global economic conditions.”

It noted all the business segments of Unisem recorded lower sales as well as lower average selling price (ASP) arising from changes in product mix.

It expects dividend yield to be “unexciting”, hovering around 2 to 3%, as the accumulated cash is expected to go to paring down its borrowings.

This morning, Affin Investment Bank also downgraded Unisem to a “sell” from “add”, with target price cut to RM0.72 per share.

Commenting on Unisem’s reported first half (1H13) core net loss of RM15.9m (1H12: -RM16.2m) on lower revenue of RM496.7m (-8% yoy), the research house said:

“On a whole, this was another disappointing set

of results…Moreover, Unisem management in their analyst briefing yesterday guided that the 3Q13 outlook is challenging…, which could mean that Unisem would likely remain in the red for the coming quarter, again.

“As a result, we no longer believe that Unisem will be able to turnaround in FY13… We cut our FY13 earnings from a RM12.7 million core net profit to a core net loss of -RM7.6 million. We have also cut our FY14-15 EPS by 39% and 30% respectively.”

Affin IB added that while Unisem’s valuations look attractive, “the absence of a solid recovery also means that there is very little reason to own the stock”.

Publish date: 25/07/13

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