KUALA LUMPUR (Dec 2): Integrated engineering support services provider UWC Bhd rose as much as 5.41% or 40 sen to RM7.79 after the group posted a 93.5% jump in net profit for the first quarter ended Oct 31, 2020 (1QFY21).
As at 11.41am, UWC had risen 5.14% or 38 sen to RM7.77, valuing it at RM4.28 billion. The stock saw some 4.53 million shares traded. It was the third top gainer across Bursa Malaysia as at the time of writing.
The stock had shot up 606% from its trough of RM1.10 on March 19.
To recap, the group reported a net profit of RM21.71 million for 1QFY21, boosted by stronger demand for both its semiconductor and life science businesses, compared with RM11.22 million a year ago.
Meanwhile, its revenue climbed 52.4% to RM71.5 million from RM46.91 million a year earlier.
Hong Leong Investment Bank (HLIB) Research analyst Tan J Young said in a note today that UWC’s results met the research house’s expectations.
“The record-setting 1QFY21 core net profit of RM23 million (+27% quarter-on-quarter; >+100% year-on-year) matched HLIB's and the consensus full-year estimates,” he said.
HLIB maintained its ‘buy’ call for UWC, with an unchanged target price (TP) of RM8.88, pegged at 38 times FY22 (ending July 31, 2022) earnings per share (EPS).
Tan said the escalating trade intensity may eventually benefit UWC, which provides a one-stop solution as more companies shift production out of China to avoid import tariffs.
Commenting on the robust outlook for the group, Tan said the group remains optimistic about its business prospects as it had been receiving enquiries from potential local and global customers on a regular basis.
“This will broaden its customer base, diversify its segmental exposure, and increase its order book in the process. UWC foresees stronger demand for chip testers ahead in tandem with the projected semiconductor equipment market growth.
"It is working closely with customers in new product development as well as project transfer, at the same time targeting potential high-end customers,” he said.
Tan noted the group had undertaken the manufacturing of front-end semiconductor and fifth-generation network (5G) equipment.
“It is constructing a class 10,000 cleanroom, expected to be completed by early 2021, to cater for front-end semiconductor equipment assembly. Also, UWC is expanding its assembly bay capacity. The autonomous vehicle chip tester is expected to commence mass production by the end of 1HFY21 (the first half ending Jan 31, 2021).
“As for the life science and medical segment, the group expects sustainable substantial growth ahead against the backdrop of Covid-19 and increased health awareness and living quality,” he added.