HLIB Research upgrades Unisem to Trading Buy, raises target to RM2.49

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KUALA LUMPUR (April 27): Hong Leong IB Research has upgraded Unisem (M) Bhd to “Trading Buy” with a higher target price of RM2.49 (from RM2.39) and said Unisem’s Q16 core net profit was in line with street’s but beat HLIB’s due to stronger-than-expected sales.

In a note today, the research house said diversification of products and market segments (customers) paid off, recording eighth consecutive year-on-year sales growth.

It said capacity utilisation rate was lower mainly due to under-loading situation in Batam.

HLIB Research said 1Q16 CAPEX was slightly higher at RM48.9 million but will not derail its CAPEX budget target.

“2Q16 revenue (in US Dollar) was guided to gain by 5-10% q-o-q while targeting for 6% growth in FY16.

“Upgrade to Trading Buy from Hold as target price was raised by 4.2% from RM2.39 to RM2.49 reflecting our upward revision of EPS.

“Valuation is pegged to lower multiple of 13x of FY16 EPS, down from 15x in consideration of diminishing US Dollar boost,” it said.