Unisem downgraded on lower Q2 loss By WONG WEI-SHEN [email protected] PETALING JAYA: Unisem (M) Bhd’s lower-than-expected second-quarter financial results, coupled with subdued customer sentiment, have led to some analysts downgrading their recommendations on the semiconductor stock. For the second quarter ended June 30, Unisem posted a net loss of RM4.2mil, representing a 44% improvement from a net loss of RM7.6mil a year ago on the back of an improved performance in the group’s respective segments. The company has been trying to ramp up its high-margin product lines as well as rationalising certain low-margin and unprofitable product lines. However, revenue for the period fell about 12% to RM246.93mil from RM282.95mil in the preceding year’s quarter due to a decrease in sales volume, as well as lower average selling prices from changes in Unisem’s product mix. This brought its first-half results for the financial year ending Dec 31 to a net loss of RM13.94mil on a revenue of RM496.65mil. Although Unisem narrowed its net losses against last year’s results, analysts said it still came in below expectations. “Unisem has stayed in the red for the second consecutive quarter, posting a second-quarter core loss of RM5.7mil (adjusted for foreign exchange and retrenchment costs), which significantly fell short of our and consensus estimates,” said RHB Research in a note. Unisem expects the third quarter to remain challenging, and hence has guided for a flattish third-quarter revenue growth. Shares in the company fell below the RM1 level to 96 sen yesterday, from RM1.01 on Wednesday on 8.6 million shares being done. Meanwhile, MIDF Research has downgraded its recommendation on the stock to “sell” from a previous “buy” call, as it has revised its earnings target downwards for the company. “On the back of a poor earnings performance, we are slashing our earnings estimate for 2013 and 2014 by 82.6% and 46.7%, respectively, to be at the conservative end. “This has been achieved by lowering our earnings before interest and tax margin for 2013 and 2014 to 2.4% and 4%, respectively, as we factor in higher operating costs to better reflect the first-half results,” MIDF Research said. The research house expects customer sentiment to remain subdued due to weary global economic conditions. “We have yet to see any killer application in the near term, which could act as a catalyst to boost sales volume,” it said. Kenanga Research has also downgraded the stock to reflect its downwards-revised earnings estimates for 2013 and 2014 to RM7.6mil and RM21mil, respectively. “While we are cautiously optimistic on the ongoing Unisem 2.0 transformation, we believe that its near-term outlook could continue to be overshadowed by a sluggish PC demand, coupled with the implementation of the minimum wage policy,” opined Kenanga analysts.
Posted on: Thu, 25 Jul 2013 23:47:56 +0000