Journey to Wealth
Unisem - 2Q12 below expectation
Period 2Q12/1H12
Actual vs. Expectations
1H12 revenue of RM539.6m accounted for 44.4% and 43.2% of the street and our full year estimate of RM1.21b and RM1.25b respectively. While the group's top line came in within expectation, its bottom line continued to suffer losses of RM21.1m. The loss was unexpected as we are estimating a full year NP of RM60.0m (consensus: RM48.4m). Note that management had earlier guided that 2Q12 NP will return to the black.
Dividends No dividend was announced during the quarter.
Key Result Highlights
YoY, the 1H12 revenue fell RM540m (-10%) no thanks to a declining turnover caused by lower ASPs and a change in product mix across the region ' Asia (-9%); Europe (-34%); and USA (-8%). The bottom line recorded a net loss of RM21.1m vs. a NP of RM17.1m a year ago due to a one-time retrenchments cost of RM5.7m, higher depreciation charges and lower foreign exchange gains.
QoQ, the revenue increased by 10% while the net loss narrowed to RM7.6m vs. RM13.5m in 1Q12 due to a higher sales volume, and the absence of the one-time retrenchment cost above, which was from an efficiency/redundancy exercise at PT Unisem in 1Q12. Hence, the LBT margin and NL margin narrowed to 2.9% (1Q12: 6.3%) and 2.7% (1Q12: 5.3%).
Outlook The group failure to turn around in 2Q12 has prompted us to review our optimistic view on the company. Based on the group's poor 2Q12 result, the group's outlook will likely remain challenging.
Furthermore, the continued uncertainty and bearishness in the global economy, particularly in Europe, may negatively impact the company outlook going forward.
Change to Forecasts
We are maintaining our FY12-FY13E earnings forecast (but with a downward bias) at this juncture pending today's result briefing.
Rating OUTPERFORM (pending review)
Valuation Our TP is under review. Our current TP is RM1.87 based on FY13 forward PBV of 1.1x.
Risks Foreign currency exchange rate.
Industry recovery may falter halfway.
Source: Kenanga
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