Unisem rises 0.82% on target price upgrade, solid outlook

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KUALA LUMPUR (Apr 17): Shares on Unisem (M) Bhd rose in the morning session today after AllianceDBS Research Sdn Bhd maintained its “Buy” rating on the stock at RM2.44 with a higher target price of RM3.05 (from RM2.40).

At 12.30pm, Unisem rose 0.82% or 2 sen to RM2.46 with 1.56 million shares done.

In a note today, the research house said Unisem was one of the very few companies that has also invested in advanced packaging technologies.

“We believe this is a key differentiator for Unisem, which would help the company to capture additional market share given the rising adoption of wafer-level chip-scale packaging (WLCSP), especially among its key customers.

The research house said factoring stronger growth for Unisem’s wafer bumping and WLCSP segment, it was raising its FY15–16F earnings by 20%–28%.

“Our FY15–16F revenue growth assumption (in USD terms) is now higher at 6%–7% (versus 4% previously) but still below management guidance of 8% for FY15F.

“In view of rising contribution from advanced packages and its strong relationship with RF customers, we believe there is a strong case for re-rating in Unisem’s valuation. Hence, we are raising our target P/B to 1.7x (from 1.5x), to derive a higher target price of RM3.05 (with 14% ROE) for Unisem. Reiterate Buy call,” it said.