Company Background. Unisem (M) is a global provider of semiconductor assembly and test services. The group offers an integrated suite of packaging and test services such as wafer bumping, wafer probing, wafer grinding, a wide range of leadframe/substrate IC packaging, wafer level CSP/RF, analog, digital and mixed-signal test services. Unisem has 2 semiconductor packaging/testing facilities and 2 wafer bumping facilities in Ipoh, Perak, Malaysia and Chengdu, China. 59% of its sales from continuing operations are to customers in North America, 31% to Asia and 10% to Europe.

Prospects. (i) Expect the group’s performance to improve further on the back of capacity expansion at its Chengdu and Ipoh plants, (ii) Focus on the consumer electronics and communication segments for the growing end-market segments in 5G, internet-of-things, sensors, virtualisation and power management, and (iii) Anticipate that Unisem’s sizeable plants and upgraded facilities in Malaysia are well-placed to benefit from customers looking to diversify their supply chain/production outside of China.

Financial Performance. In 1QFY23, Unisem posted a lower revenue of RM354mil (-16.6% YoY) with a PAT of RM9.8mil (-80.6% YoY), due to lower sales volume in line with softer market conditions. In FY22, group revenue rose to RM1.78bil (+13.6% YoY) with a PAT of RM243.4mil (+22.8% YoY). This was primarily attributable to better average selling price and higher sales volume as well as the appreciation of USD/MYR and USD/RMB exchange rates.

Technical Analysis. Unisem may trend higher after it surged to a new 52-week high and closed above the key RM3.30 resistance a few sessions ago. With the 20-day EMA remaining above 50-day EMA since the bullish crossover in mid-June, the uptrend may persist in the near term. A bullish bias may emerge above the RM3.30 level, with stop-loss set at RM3.08, below the 50-day EMA. Towards the upside, near-term resistance level is seen at RM3.80, followed by RM4.00.

Source: AmInvest Research - 24 Jul 2023