KUALA LUMPUR (March 16): UWC Bhd's net profit came in 24% lower for its second quarter ended Jan 31, 2023 (2QFY2023) as expansion and higher minimum wage increased staff costs while the ringgit's appreciation against the US dollar resulted in a foreign exchange (forex) loss.
The net profit dropped to RM19.1 million or 1.73 sen per share, from RM25.08 million or 2.28 sen per share a year earlier, despite revenue growing by 15% to RM91.92 million from RM79.92 million, helped by capacity expansion amid growing order book from the semiconductor industry.
Excluding the forex impact, the group would have generated a higher operating profit in 2QFY2023, said UWC in a filing with Bursa Malaysia.
“As the group transacted sales in US dollar extensively and held US dollar reserves, the abrupt appreciation of the ringgit against the US dollar during the quarter caused a loss on foreign exchange,” the group said.
For the first six months of FY2023, UWC's net profit inched up 0.5% to RM48.35 million from RM48.12 million in the previous corresponding period, while revenue grew 19% to RM184.04 million from RM155.17 million.
Going forward, as more front-end semiconductor manufacturing related projects are in the pipeline, UWC said it is actively working with potential front-end semiconductor customers for project transfer, and remains optimistic in securing orders from these new customers.
In addition, it said the increasing trade tensions between the US and China could potentially translate into new business opportunities.
“China businesses may seek outward to diversify its risks and start relocating their supply chains to the Malaysia market,” it said.
Moreover, UWC observes the many announcements of additional semiconductor foundries investment across the world, indicating an impending front-end semiconductor equipment demand on the horizon.
“Consequently, it is the group’s long-term strategy to continue [to] invest and develop its capabilities as a front-end semiconductor equipment manufacturer,” it added.
On the group’s life science and medical technology businesses, UWC said its involvement in the medical instrument manufacturing industry is expected to benefit in the long run with the success of mRNA technology that not only caters for the profound coronavirus disease, but also opens up other possibilities in developing vaccines for cancer and therapeutic treatments.
“The group continues to maintain virus extraction machines, DNA analyser and cell electroporation instrument in its products pipeline as part of future business direction.
“Leveraging on its expertise, the group engages in various project transfers with customers to secure more full box-build jobs,” it said.
UWC’s executive director and group chief executive officer Datuk Ng Chai Eng said the group will continue its efforts in securing more orders while moving into various industries within the semiconductor segment.
“Our approach has enabled us to maintain a healthy pipeline following the inclusion of projects such as front-end semiconductor, 5G, autonomous vehicle-related chip testers as well as electric vehicle battery cell emulators which will continue to drive the growth of the group.
“Looking at the long run, UWC remains optimistic of its business outlook. We remain confident that we will be able to capture a larger market share from the total addressable markets,” he said in a statement.
Shares of UWC closed 15 sen or 4.5% lower at RM3.15 on Thursday (Match 16), giving the group a market capitalisation of RM3.47 billion. The counter has fallen 21% so far this month.