This article first appeared in The Edge Financial Daily on October 30, 2019

KUALA LUMPUR: Persistent selling in two semiconductor-related companies — ViTrox Corp Bhd and Unisem (M) Bhd — further pulled down their share prices after they disappointed investors with their latest quarterly earnings.

Unisem’s share price slid 5.08% or 13 sen yesterday to close at RM2.43 with some 1.18 million shares traded.

None of the analysts who tracked the stock have them on their recommendation lists, according to Bloomberg. Still some bargain-hunting emerged when the stock dipped below RM2.40 and this helped lift the counter off from the intraday low of RM2.36.

Kenanga Research analyst Adrian Kok said Unisem’s performance is likely to remain weak going forward, given the expected final severance payout for the closure of Batam plant.

The analyst downgraded Unisem to “underperform” from “market perform” with a cut in the target price to RM2.15 from RM2.40 previously.

“Given this set of disappointing results, expectations of another soft quarter ahead, and 34% share price appreciation since September 2019, we believe the risks outweigh the rewards at this juncture,” Kok wrote in a note yesterday.

Meanwhile, ViTrox’s share price fell to an intraday low of RM7.33 yesterday, before it closed at RM7.45, down 14 sen or 1.84%. However, trading volume dipped to 566,200 shares from 2.83 million shares last Friday.

Likewise, according to Bloomberg, there is no buying recommendation on ViTrox. Its share price rallied 32.5% to RM8.29 just three weeks ago.

ViTrox’s price has fallen 62 sen in the two trading days after the news that its quarterly earnings were halved to RM13.86 million from RM28.02 million in the previous corresponding quarter.

ViTrox attributed the dismal performance to the decline in sales volume.

The selldown has wiped out some RM292.02 million of market capitalisation in two trading days.

On Unisem’s financial results, the company last Friday announced that it incurred a net loss of RM3.21 million for the third quarter ended Sept 30, 2019, compared to a net profit of RM35.15 million a year ago, due to expenses arising from the closure of its Batam unit, PT Unisem.

There was also a higher recognition of deferred tax expense due to the reversal of retirement benefits in the Indonesian operation, besides the lower gain on foreign exchange.