UNISEM: Earnings Plummeted Again

Results Update

For QE30/9/2019, Unisem's pre-tax profit dropped 50% q-o-q or 75% y-o-y to RM10 million  while revenue was mix- rose 1.4% q-o-q but dropped 10.8% y-o-y to RM316 million. The lower pre-tax profit was primarily attributable to net expenses incurred on severance against reversal of retirement benefits in PT Unisem.

Unisem reported a loss after tax due to higher effective tax rate arising from the reversal of retirement benefits in PT Unisem amounting to RM6.53 million as well as the losses of a subsidiary company which cannot be used to offset against profits of other companies in the Group.

Table: Unisem's last 8 quarterly results


Graph: Unisem's last 60 quarterly results

Financial Position

As at 30/9/2019, Unisem's financial position is deemed satisfactory with current ratio at 2.6 times while gearing ratio at 0.3 time.

Valuation

Unisem (closed at RM2.56 yesterday) is now trading at a PE of 45 times (based on last 4 quarters' EPS of 5.61 sen). At this PER, Unisem is deemed overvalued.

Technical Outlook

Recently, Unisem rebounded to test its downtrend line at RM2.60. While it went above the downtrend line, the breakout could have sustained.


Chart: Unisem's monthly chart as at Oct 25, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on weaker financial performance and bearish technical outlook, I rate Unisem as a SELL.

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.

Unisem: Earnings Rebounded

Results Update

For QE30/6/2018, Unisem's net profit rose 4-fold q-o-q but dropped 26% y-o-y to RM31 million  while revenue rose 7% q-o-q but dropped 6% y-o-y to RM343 million. Revenue & net profit dropped y-o-y primarily due to the depreciation of USD/MYR exchange rates as compared to the prevailing rates a year ago. The decline in net profits for the current quarter and financial period to date was further impacted by the lower profit margins arising from change in product mix. PBT rose q-o-q mainly due to foreign exchange gain of RM10.02 million as opposed to the foreign exchange loss of RM9.95 million previously as well as improvement in sales volume.

Table: Unisem's last 8 quarterly results


Graph: Unisem's last 55 quarterly results

Valuation

Unisem (closed at RM2.59 yesterday) is now trading at a PE of 17 times (based on last 4 quarters' EPS of 14.9 sen). At this PER, Unisem is deemed fully valued. It has a decent dividend yield of 3.9% fro those who wants to hold it for longer term.

Technical Outlook

Unisem tested its long-term uptrend line, SS at RM1.80 in May, and rebounded.


Chart 1: Unisem's monthly chart as at Aug 2, 2018 (Source: Shareinvestor.com)

However Unisem may not have broken above its downtrend since it peaked in August last year.


Chart 2: Unisem's weekly chart as at Aug 2, 2018 (Source: Shareinvestor.com)

Conclusion

Despite the improvement in its financial performance, Unisem's near term outlook is still uncertain due to negative technical outlook and fairly demanding valuation. I think one should take profit (if any) if Unisem reached the RM2.70 mark.

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.

Unisem: Earnings Plummeted

Results Update

For QE31/13/2018, Unisem's net profit dropped 81% q-o-q or 87% y-o-y to RM6 million  while revenue dropped 10% q-o-q or 11% y-o-y to RM322 million. Revenue dropped 10.0% y-o-y due to lower revenue in USA and Asia of 3.5% and 21.8% respectively whilst Europe’s segment revenue increased by 2.4%. The decrease in revenue was mainly attributable to the depreciation of USD/MYR exchange rate. The decline in net profit was mainly due to depreciation of USD/MYR exchange rate coupled with lower profit margins arising from change in product mix as well as the recognition of foreign exchange losses of RM9.950 million in the current financial quarter.

Table: Unisem's last 8 quarterly results


Graph: Unisem's last 54 quarterly results

Valuation

Unisem (at RM1.80 as at 4.00pm) is now trading at a PE of 11 times (based on last 4 quarters' EPS of 16.4 sen). At this multiple, Unisem is deemed fairly valued. However we have to wrestle with the big question of whether Unisem's earning has peaked. If earning has peaked, then it will likely to continue to trend lower and so would the share price.

Technical Outlook

Unisem broke its long-term uptrend line, SS at RM2.60 in February. Today it even broke the psychological RM2.00 mark. the next support will be from horizontal lines at RM1.80 & RM1.60.


Chart: Unisem's monthly chart as at Apr 25, 2018_10.00am (Source: Shareinvestor.com)

Conclusion

Based on poor financial performance & bearish technical outlook, Unisem has become a stock in search of a bottom. Despite the sharp decline, we have to be careful when approaching this stock because it could have turned into a value trap in the event its earning has peaked.

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.

Semiconductor Stocks: Down For Now

A few months ago, I mentioned about the change in forex outlook (more favorable for MYR) and its impact on share prices. I have recommended that you should shift from exporters to importers. 

If you have read thru some of the notes to the accounts of exporters that had suffered sharp drop in profits, you would have seen the similar commentary on the impact of this unfavorable forex movement. For instance, this is the explanation given by Thong Guan for its sharp drop in profits: "Lower profit before tax for the current quarter was mainly due to the reduction in gross profit margin in plastic products mainly due to lower selling prices of USD sales when translated to MYR as a result of the depreciation of the USD against MYR especially during the fourth quarter."

I can imagine a situation where exporters who had been enjoying super profit due to favorable forex movement in 2016 and early part of 2017, were pressured by their customers to "share" the profit in the form of lower prices. Naturally the recent drop in profits would lead to these exporters raising their prices again but the price increase will not be immediate nor will they match the swing in forex movement. This laggard effect would mean that exporters will have 2-3 quarters of lower profit. t

That's why we have seen a selldown for some exporters, like MPI and Unisem even though the Semicoductor Index in Philadelphia (SOX) is still trending higher. I believe that MPI and Unisem share price will likely to stabilize at the current level for a while before continuing they return to the prior uptrend. Thus these stocks could be good stocks to consider for long-term investment in the current weak market.


Chart 1: SOX's daily chart as at mar 5, 2018 (Source: Stockcharts.com)

Below are the charts for MPI and Unisem. They are now resting at their respective uptrend line support at RM8.70 for MPI and RM2.55 for Unisem.

Chart 2: MPI's weekly chart as at Mar 5, 2018 (Source: Malaysiastock.biz)


Chart 3; Unisem's weekly chart as at Mar 5, 2018 (Source: Malaysiastock.biz)

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.

Semiconductor Stocks May Consolidate For A While

In the past 2 weeks, the Philadelphia Semiconductor Index (SOX) had been sliding. Last Wednesday, it broke below its 50-day SMA line at 985, and it closed at 960 - a level well below its intermediate uptrend line at 975 - on last Friday. 

In addition, we can also see that MACD was nearly below the zero line and the RSI has broken its uptrend line support. These plus the breakdown of the uptrend line and the 50-day SMA line could signal a temporary top for SOX. 

Chart 1: Philadelphia Semiconductor Index (SOX)'s daily chart as at April 14, 2017 (Source: Stockcharts.com)

If we look at the weekly chart, we will see MACD has hooked down and -DMI has crossed above +DMI. This negative signal may lead to a prolonged period of consolidation similar to that experienced in August 2015 to February 2016 (denoted as “B” on the SOX weekly chart) or a brief but sharp correction as witnessed by the market in September 2014 (denoted as “A” on the SOX weekly chart).


Chart 2: Philadelphia Semiconductor Index (SOX)'s weekly chart as at April 14, 2017 (Source: Stockcharts.com)

Looking at our the weekly charts of MPI & Unisem, we can see similar consolidation or correction (denoted as “A” and "B" respectively). Undoubtedly the share prices of both MPI & Unisem are off their recent high today. If you expect SOX to correct or consolidate in the next few days or weeks, you should take precaution by avoiding MPI or Unisem. As at 3:55 pm, MPI & Unisem were trading at RM10.96 & RM3.01 respectively.


Chart 3: MPI's weekly chart as at April 14, 2017 (Source: Malaysiastock.biz)


Chart 4: Unisem's weekly chart as at April 14, 2017 (Source: Malaysiastock.biz)

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.

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.

Unisem: Earnings Improved

Results Update

For QE30/6/2016, Unisem's net profit increased 8% q-o-q or 20% y-o-y to RM38 million while revenue was up a minuscule 1% q-o-q or 7% y-o-y to RM321 million. The profit before tax increased q-o-q primarily due to the higher gain on foreign exchange. Revenue increased y-o-y mainly due to improved average selling prices arising from the appreciation of US$/RM and US$/RMB exchange rates. PBT rose y-o-y due to increased revenue and improved margins from better contribution in its wafer bumping and advanced package operations.  

Table: Unisem's last 8 quarterly results


Chart 3: Unisem's last 47 quarterly results

Valuation

Unisem (closed at RM2.55 last Friday) is now trading at a PE of 11 times (based on last 4 quarters' EPS of 23.59 sen). At this multiple, Unisem - a cyclical stock - is deemed fairly valued. 

Technical Outlook

Unisem broke above the intermediate downtrend line, AB at RM2.46 in early July. It rallied to a high of RM2.79 in the past 2 week. Last Friday, it announced its latest results, which is quite good but its share price tumbled. It closed below the April 2015 high of RM2.65. This could lead to further correction in the days ahead. The immediate support is at RM2.45-2.50.

 
Chart 2: Unisem's weekly chart as at Aug 5, 2016 (Source: ShareInvestor.com)

If the share price can remain above RM2.45, Unisem's breakout may lead to its next upleg.

 
Chart 3: Unisem's monthly chart as at Aug 5, 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance fairly and attractive valuation, Unisem remains a good stock for medium-term investment. Its sudden price correction heralds uncertainty in the near term.

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.

Unisem: Potential Bullish Breakout

Current Technical Outlook

Last Friday, Unisem broke above the intermediate downtrend line, RR at RM2.46. It rallied to a high of RM2.60- 10 sen short of its April 2015 high of RM2.70- and closed at RM2.54. The price breakout- coupled with MACD above the zero line and +DMI above -DMI - could signal the continuation of Unisem's uptrend after a pause of more than 1 year. (Note: Momentum is still lacking as revealed by ADXR below 20.)


Chart 1: Unisem's weekly chart as at July 8, 2016 (Source: ShareInvestor.com)

If the breakout gathers enough momentum, Unisem's next upleg could go as far as RM5.00.


Chart 2: Unisem's monthly chart as at July 8, 2016 (Source: ShareInvestor.com)

Recent Financial Results

For QE31/3/2016, Unisem's net profit dropped 43% q-o-q but rose 48% y-o-y to RM35 million while revenue was down 10% q-o-q but rose 13% y-o-y to RM318 million. Revenue rose y-o-y mainly due to improved average selling prices arising from the appreciation in the US$/RM and US$/RMB exchange rates. The improvement in net profit was due to increased revenue and improved margins from better contribution in our wafer bumping and advanced package operations. Unisem's packaging operation includes wafer level chip-scale packaging, a high margin product, for customers in the smartphone, PC, and automotive segments. Could this new packaging method enable the company to continue to report higher profits? We have to wait and see. (For more, go to the Star newspaper article dated 30/4/2016.)

Table: Unisem's last 8 quarterly results


Chart 3: Unisem's last 46 quarterly results

Valuation

Unisem (closed at RM2.54 last Friday) is now trading at a PE of 11 times (based on annualized FY14E EPS of 23.05 sen). At this multiple, Unisem - a cyclical stock - is deemed fairly valued.

(Note: The major shareholder of Unisem, John Chia has been buying steadily for the past 8-9 months. Since January, John Chia has added 6 million shares to his direct & indirect holding; raising his total shareholding from 24.9% to 25.8%. For more, go to Unisem's Changes in Shareholding.)
 
Conclusion

Based on improving technical outlook, I revise my rating for Unisem from SELL INTO STRENGTH to a HOLD. Please exercise careful discretion if you choose to trade the breakout as the stock could be at its peak earning now.

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.