Unisem (Hold)

2Q12 Results: Below Expectations

• Overall result was a great disappointment, missing ours and consensus’ estimates on both top and bottom lines.
• Although sales registered a double digit growth of 10.3% qoq, EBITDA and EBITDA margin did not improve in tandem after stripping of one-off retrenchment cost amounted to RM5.7m in 1Q12.
• Although the quarter enjoyed a 10.3% qoq increase in revenue, yoy comparison revealed a very concerning outlook with all geographical turnovers suffered a decline with -7% in Asia, -39% in Europe and -20% in USA. This is mainly due to lower ASP and change in product mix.
• Unisem guided that the industry has deteriorated in recent months due to uncertainty and bearishness in the global economy, particularly in Europe. The operating environment is expected to remain challenging for FY12.
• We downgraded our TP by 15.5% to RM1.22 from RM1.48 based on P/B of 0.76x (-0.5SD below historical mean) FY13 book per share, remain HOLD rating on the equity.

Source: Hong Leong Investment Bank Research - 10 August 2012