CEO Morning Brief

Unisem’s 2Q Profit Plunges 88% on Lower Sales Volume and Absence of Disposal Gain

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Publish date: Fri, 28 Jul 2023, 08:57 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (July 27): Unisem (M) Bhd saw its net profit plunge 88.4% to RM23.93 million for the second quarter ended June 30, 2023 (2QFY2023), as compared to RM205.86 million a year earlier, due to lower sales volume on softer market demand.

Notably, this is the second consecutive quarter that Unisem reported a lower profit year-on-year.

Quarterly revenue also fell 18.4% to RM378.66 million in 2QFY2023, down from RM464.06 million a year ago, the group’s Bursa Malaysia filing on Thursday (July 27) showed.

Nonetheless, Unisem declared a second interim dividend of two sen per share for the financial year ending Dec 31, 2023 (FY2023). The dividend will be paid on Aug 25.

It is worth noting that Unisem’s weaker earnings performance was also partly due to the high base effect, as the group realised a massive disposal gain in 2QFY2022.

To recap, PT Unisem, an Indonesian indirect subsidiary of the company, had in 2QFY2022 completed the sale of its land and building in Batam, Riau Islands province, resulting in a gain on disposal amounting to RM131.78 million. The net proceeds from the RM141.35 million disposal had been fully settled in cash.

PT Unisem had discontinued its operations in March 2020, before selling its assets to PT Infineon Technologies Batam. Thanks to the disposal gain, the discontinued operations were still reporting a profit of RM135.46 million in 2QFY2022.

For the first half of 2023 (1HFY2023), the group posted a net profit of RM33.78 million, down 86.8% from RM256.55 million posted a year before. Its revenue fell 17.5% to RM732.71 million in 1HFY2023, down from RM888.5 million in 1HFY2022.

As things stand, it is hard to see how Unisem could meet research analysts’ earnings expectations.

For perspective, the group’s profits of RM33.78 million in 1HFY2023 only made up 17% of RHB Research’s full-year earnings forecast of RM196 million, 22% of TA Securities’ forecast of RM155.2 million, as well as 23.5% of Kenanga Research’s forecast of RM143.2 million.

It remains to be seen if these research houses will slash their earnings forecasts for Unisem in the next few days.

On future prospects, Unisem said the group’s performance will “remain muted in the near term” due to “challenging macroeconomic environment”.

Unisem shares fell 11 sen or 3.3% to close at RM3.22 on Thursday, valuing the semiconductor assembly and test services provider at RM5.19 billion.

Source: TheEdge - 28 Jul 2023

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