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Thursday, February 23, 2017

Unisem: Unexciting Earning

Results Update

For QE31/12/2016, Unisem's net profit increased 33% q-o-q but dropped 15% y-o-y to RM51 million while revenue rose 12% q-o-q or 3% y-o-y to RM362 million. Profits increased q-o-q primarily attributable to higher revenue.


Table: Unisem's last 8 quarterly results

From the graph below, we can see that both revenue & profits are at the high for the past 12 years. Its failure to report a higher pre-tax profit and a net profit for QE31/12/2016 as compared to QE31/12/2015 could be an indication that earning has peaked.
 

Graph: Unisem's last 49 quarterly results

Valuation

Unisem (closed at RM2.77 at end of the morning session) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 22.12 sen). At this multiple, Unisem - a cyclical stock - is deemed fairly valued. 

Technical Outlook

Unisem is in an uptrend line, SS. Its upside is capped by the line connecting the recent peaks, with resistance at RM2.80.

 
Chart: Unisem's weekly chart as at Feb 23, 2017_15.00 (Source: MalaysiaStock.Biz)

Conclusion

Based on good financial performance, fair valuation valuation and still positive technical outlook, Unisem remains a good stock for medium-term investment. Its inability to report a higher quarterly earning could be an early sign that its earning has peaked. It may be a good idea to take profit by SELLING INTO STRENGTH at prices above RM2.70.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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