Unisem's net profit jumped in 4Q2007

Unisem has just reported its results for 4Q2007. Its net profit jumped 84% q-o-q or 268% y-o-y to RM57.2 million, while its turnover has increased by 18% q-o-q or 110% y-o-y to RM360 million. The sharp improvement in net profit was attributable to higher turnover, profit contribution from both Unisem Mauritius & Chengdu as well as higher unrealized forex gains.

Due to the substantial jump in turnover in 2H2007, Unisem's results for FY2007 is significantly better than FY2006. Net profit increased by 66% from RM71.5 million to RM118.6 million on the back of a 40%-increase in turnover from RM693 million to RM973 million. While expecting a seasonal softening in 1Q2008, Unisem's management expects its performance for FY2008 to be better than FY2007 on account of its acquisition of Unisem Mauritius & expanded operation in Unisem Chengdu.



Based on yesterday's closing price of RM1.51, Unisem is now trading at a trailing PE of 6 times (basing on FY2007 EPS of 25 sen) or Price to Book of 0.9 times (basing on NTA per share of RM1.73 as at 31/12/2007). As at, Unisem is trading at a relatively undemanding multiples.

Technical speaking, Unisem has been range-bound between RM1.40 & RM2.00 for most part of 2006 & 2007. It did break above the range for a short period in the 1st quarter of 2007 but this breakout was not followed through by any rally.

The long-term downtrend line will still act as a resistance at the RM1.90 level. A break above this resistance could signal the beginning of better price for Unisem going forward.


Chart 1: Unisem's monthly chart as at February 20, 2008 (courtesy of Quickcharts)



Chart 2: Unisem's weekly chart as at February 20, 2008 (courtesy of Quickcharts)

Based on good financial performance & undemanding valuation, Unisem is a good BUY for long-term investment.