THE BUZZ
Unisem reported another quarterly loss, bringing 1HFY12 losses to RM16m, sharply below our and consensus full-year estimates. We are likely to downgrade our forecast following the analyst briefing later today on the back of the still weak and patchy industry fundamentals.

OUR TAKE
Seasonal push. In line with the historical trend and the seasonality observed, Unisem's 2QFY12 revenue improved by 10% q-o-q to RM283m (-8% y-o-y). Breaking down its revenue by geographical segments, there were some degree of improvement sequentially but this was still down on a y-o-y basis. Asia/Europe/US reported sales of RM277m, RM3m and RM3m respectively for 2QFY12 (q-o-q: 11%/2%/-13%, y-o-y: -7%/-39%/-20%).

Third consecutive quarter of losses. The group reported a net loss of RM7.6m in 2QFY12 which was an improvement over the RM8.4m loss in the preceding quarter, excluding retrenchment cost of RM5.7m. The results were characterized by weaker loadings, higher depreciation charges, forex losses and increased interest expenses. No dividend was declared during the quarter.

Under review. We put our recommendation under review but are likely to downgrade our forecast after the analyst briefing later today. Note that the guidance from both the upstream and downstream US semiconductor players remained mixed and should continue to cloud the outlook for the sector. The worldwide semiconductor sales in 1H2012 were still 5.4% below the comparable period in 2011 while the book-to-bill ratio stood at 0.94x in June. Our previous call on the stock was a Trading BUY based on a FV of RM1.73, pegged to 1.1x FY13 P/NTA.

Source: OSK