UNISEM (5005) - Unisem - Sealed and delivered
Target RM2.50 (Stock Rating: ADD)
We were positively surprised with Unisem stronger earnings performance in 4QFY14 as full-year core net profit came in above at 114% of our and 108% of consensus estimates. It recorded RM25m core net profit in 4FY14 vs. a RM3.1m core net loss in 4QFY13 on the back of a higher utilisation rate and stronger shipment volume from advanced packages. Management is guiding for 8% revenue growth in FY15 due to robust demand from wafer-level chip scale package (WLCSP) and leadless package. Therefore, we raise our FY15-16 EPS forecasts by 13-22% and reiterate an Add, with a higher target price of RM2.50, based on 15.2x CY16 P/E, 1 s.d. above its 1-yr historical mean (vs. a 2-yr historical mean of 16.7x previously to better reflect the recent stock performance following an earnings recovery in FY14).
Turning the corner
Unisem posted a core net profit of RM62.8m in FY14 vs. RM17.1m core net loss in FY13, mainly due to higher utilisation rates and better sales volumes for advance packages such as leadless, WLCSP and test services. As a result of the higher operating leverage, EBITDA margin increased by 6.2% pts from 17.9% to 24.1%. Unisem also declared a final dividend of 4 sen, bringing the total dividend to 6 sen, which was ahead of consensus expectations of 4.3 sen, but slightly below our 7 sen estimate.
A stronger year ahead
Management’s is guiding for 8% revenue growth in FY15, higher than the 4.8% in FY14. We believe this is reasonable given that industry research groups are still expecting semiconductor industry sales to grow by 6-7% in FY15. Moreover, Unisem should benefit from robust demand in smartphone devices due to its exposure to communication components such as RF switch, MEMS sensor and Wifi modules. Nonetheless, management is guiding for a sequential revenue decline of between 0-5% in 1Q15, which is in line with our expectation given the seasonal weakness in demand and shorter operating days. Nevertheless, we expect Unisem’s performance to pick up from 2Q15, driven by a recovery in demand and expansion in its bumping and WLCSP production capacity.
We maintain an Add
A sustainable margin recovery, higher dividend payout and stronger contribution from the smartphone and automotive segments could be catalysts.
Source: CIMB Daybreak - 12 February 2015
Target RM2.50 (Stock Rating: ADD)
We were positively surprised with Unisem stronger earnings performance in 4QFY14 as full-year core net profit came in above at 114% of our and 108% of consensus estimates. It recorded RM25m core net profit in 4FY14 vs. a RM3.1m core net loss in 4QFY13 on the back of a higher utilisation rate and stronger shipment volume from advanced packages. Management is guiding for 8% revenue growth in FY15 due to robust demand from wafer-level chip scale package (WLCSP) and leadless package. Therefore, we raise our FY15-16 EPS forecasts by 13-22% and reiterate an Add, with a higher target price of RM2.50, based on 15.2x CY16 P/E, 1 s.d. above its 1-yr historical mean (vs. a 2-yr historical mean of 16.7x previously to better reflect the recent stock performance following an earnings recovery in FY14).
Turning the corner
Unisem posted a core net profit of RM62.8m in FY14 vs. RM17.1m core net loss in FY13, mainly due to higher utilisation rates and better sales volumes for advance packages such as leadless, WLCSP and test services. As a result of the higher operating leverage, EBITDA margin increased by 6.2% pts from 17.9% to 24.1%. Unisem also declared a final dividend of 4 sen, bringing the total dividend to 6 sen, which was ahead of consensus expectations of 4.3 sen, but slightly below our 7 sen estimate.
A stronger year ahead
Management’s is guiding for 8% revenue growth in FY15, higher than the 4.8% in FY14. We believe this is reasonable given that industry research groups are still expecting semiconductor industry sales to grow by 6-7% in FY15. Moreover, Unisem should benefit from robust demand in smartphone devices due to its exposure to communication components such as RF switch, MEMS sensor and Wifi modules. Nonetheless, management is guiding for a sequential revenue decline of between 0-5% in 1Q15, which is in line with our expectation given the seasonal weakness in demand and shorter operating days. Nevertheless, we expect Unisem’s performance to pick up from 2Q15, driven by a recovery in demand and expansion in its bumping and WLCSP production capacity.
We maintain an Add
A sustainable margin recovery, higher dividend payout and stronger contribution from the smartphone and automotive segments could be catalysts.
Source: CIMB Daybreak - 12 February 2015
