UNISEM (5005) : Affin Hwang Research downgrades Unisem to Sell
KUALA LUMPUR: Affin Hwang Research has downgraded Unisel to a Sell from Reduce with a target price of RM1.54 based on an unchanged 2015E 1 time P/BV, in line with mid-cycle valuations.
In a note on Tuesday, the research house said Unisem’s stock price has continued to gain positive traction on accumulation by a major shareholder.
"We think this could be attributed to its strong 3Q14 results and the possibility of strong earnings delivery in the subsequent quarters, its exposure to the robust RF business and the potential for a strong DPS in 4Q14.
"However, trading at 17.3 times 2015 EPS, and a premium to peers, we believe that good news is already in the price.
"On a risk adjusted basis, Unisem is the most expensive semiconductor stock under our coverage. With good news priced in and limited re-rating catalyst from this point, we turn anti-consensus on the stock, downgrading Unisem to Sell with an unchanged target price of RM1.54," it noted.
Going forward, with increasing risk of demand uncertainty kicking in, and cost down strategies being sparked off by Chinese handset device manufacturers, Affin is less certain that manufacturing conditions will be as “favourable“ as experienced over the past two years.
"We understand that some inventory correction is already occurring in the industrial and consumer product segments," it noted.
http://www.thestar.com.my
KUALA LUMPUR: Affin Hwang Research has downgraded Unisel to a Sell from Reduce with a target price of RM1.54 based on an unchanged 2015E 1 time P/BV, in line with mid-cycle valuations.
In a note on Tuesday, the research house said Unisem’s stock price has continued to gain positive traction on accumulation by a major shareholder.
"We think this could be attributed to its strong 3Q14 results and the possibility of strong earnings delivery in the subsequent quarters, its exposure to the robust RF business and the potential for a strong DPS in 4Q14.
"However, trading at 17.3 times 2015 EPS, and a premium to peers, we believe that good news is already in the price.
"On a risk adjusted basis, Unisem is the most expensive semiconductor stock under our coverage. With good news priced in and limited re-rating catalyst from this point, we turn anti-consensus on the stock, downgrading Unisem to Sell with an unchanged target price of RM1.54," it noted.
Going forward, with increasing risk of demand uncertainty kicking in, and cost down strategies being sparked off by Chinese handset device manufacturers, Affin is less certain that manufacturing conditions will be as “favourable“ as experienced over the past two years.
"We understand that some inventory correction is already occurring in the industrial and consumer product segments," it noted.
http://www.thestar.com.my
