• HLIB calls a BUY rating on UNISEM with an institutional target price of RM2.82, or 18% upside. Overall, the robust 34.3% surge in share price YTD has not fully reflected operational improvement, as HLIB anticipates UNISEM’s earnings prospects to remain bright in the near to medium term, with a robust 49% EPS CAGR from FY14-16.
• Management is guiding for a 10-15% sequential revenue growth in 2Q15, driven by strong demand for its leadless, wafer-level package and test segment which have exposure in the smartphone segment. Following a strong 1Q15 res ults , HLIB Ins titutional Res earch had upgraded UNISEM’s fair value by 16.5% from RM2.42 to RM2.82 (please refer to our report dated 29 Apr), pegged to unchanged multiple of 15x of FY16 FD EPS of 18.8sen.
• UNISEM’S share prices stage a pullback after hitting 52-week high of RM2.65. In tandem with profit taking consolidation among export-oriented semiconductor companies following pullback in US$ vs RM, UNISEM’s s hare prices corrected 15.8% from a 52-week high of RM2.65 (21 Apr) to a low of RM2.23 on 29 Apr before ending at RM2.39 on 30 Apr, ahead of its AGM on 6 May.
• Potential reversal from recent retracement. The stock is grossly oversold as s ubs tantiated by daily s low s tochas tics . Moreover, “Bullis h Harami” candlestick pattern on daily chart suggests potential reversal trajectory. Hence, we opine that share price is about to reverse the recent retracement. Upside target prices are located at RM2.49 (61.8% FR) and RM2.59 (daily upper Bollinger band), with a long-term price objective of RM2.67 (5-year high on 3 May 2010).
• Immediate supports are situated near RM2.30 (30-d SMA) and RM2.22 (50-d SMA). Failure to maintain above RM2.22 (50-d SMA) on any pullback will turn overall picture into negative sentiment. Cut loss at RM2.17, which is 2sen below UNISEM-WA strike price (expire on 24 Aug 2015) of RM2.18.

Source: Hong Leong Investment Bank Research - 5 May 2015