CIMB Research maintains Add on Unisem, ups target to RM2.65

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KUALA LUMPUR (April 29): CIMB Research has maintained its “Add” rating on Unisem (M) Bhd at RM2.43 with a higher target price of RM2.65 (from RM2.50) and said Unisem’s 1Q15 core net profit was slightly ahead of house expectation at 25% of its full-year estimate, but in line with consensus at 21%.

In a note today, the research house said Unisem posted a RM21.5 million core net profit in 1Q15 versus RM100,000 core net loss in 1Q14 on the back of a higher utilisation rate and improving product mix from advanced packages.

“Management’s guidance of a 10-15% sequential revenue growth for 2Q15 due to robust demand from wafer-level chip scale package (WLCSP) and bumping services for the communication segment was a positive surprise for us.

“As such, we raise our FY15-17 EPS forecasts by 6-20% and increase our target price to RM2.65, based on 17x CY16 P/E, 1 s.d. above its historical mean.

“Sustainable margin improvements and a higher dividend payout are potential catalysts that support our Add rating,” it said.