Unisem: Bottom-line & top-line continue to rise

Result Update

For QE30/9/2015, Unisem's NP rose 28% q-o-q or 48% y-o-y to RM40.2 million while revenue was up 10% q-o-q or 21% y-o-y to RM330 million. The company attributed the higher net profit for the current quarter to increased  revenue and lower interest expense. The directors expect the performance of the Group will remain satisfactory till the end of the financial year.


Table: Unisem's last 8 quarterly results


Chart 1: Unisem's last 44 quarterly results

Industrial Outlook

Semiconductor Industry Association (SIA) reported recently that global sales for August 2015 total of $27.9 billion were 3.0 percent lower than the August 2014 total of $28.6 billion. Regionally, year-to-year sales increased in China (4.4 percent), but decreased in the Americas (-3.5 percent), Europe (-12.4 percent), Japan (-13.0 percent), and Asia Pacific/All Other (-2.3 percent). SIA's president and CEO, John Neuffer said “The global semiconductor market has endured a slight softening of demand in recent months, which has combined with currency devaluation and regular market cyclicality to slow sales somewhat”. For more, go here.

Meanwhile the Philadelphia's Semiconductor index, SOX has rebounded off its August low of 550 to 660.  

 
Chart 2: SOX's weekly chart as at Oct 29, 2015 (Source: Stockcharts.com)

Valuation

Unisem (closed at RM2.30 yesterday) is now trading at a PE of 14 times (based on annualized FY14E EPS of 16.7 sen). At this multiple, Unisem - a cyclical stock - is deemed fairly valued.

Technical Outlook

Unisem share prices tend to trend. From the chart below, we can see uptrend & downtrend alternate from time to time. Currently, it has broken its immediate uptrend line. This means that Unisem could be at the start of a downtrend. You should note that MACD & Stochastic have both hooked down.


Chart 3: Unisem's monthly chart as at Oct 29, 2015 (Source: ShareInvestor.com)

Conclusion

Despite the satisfactory financial performance, Unisem should be treated with a bit of caution as its technical outlook is showing signs of a possible top. I would rate it a HOLD for now but if the share price exceeds the RM2.50 mark, you may consider SELL INTO STRENGTH.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Unisem.