KUALA LUMPUR: Unisem (M) Bhd's results for the first half of 2024 (1H24) missed CIMB Securities' and consensus' expectations at 20 per cent and 18 per cent respectively, due to weaker than anticipated pick up in Unisem Ipoh's utilisation in the second quarter.
The marginal improvement in Unisem Ipoh's capacity utilisation was due to softer demand from key radio-frequency (RF) customers supporting the smartphone and tablet segment.
Core net profit in 1H24 declined 21 per cent year-on-year (YoY) to RM26.7 million due to lower sales, changes in sales mix, and the negative impact of higher utilities and labour costs.
The research firm noted Unisem remains optimistic for a stronger sales and earnings growth recovery in 2H24F, driven by a new microphone sensors programme for next-generation smartphone launches in September, a new tyre pressure monitoring system (TPMS) customer in China, and a pick-up in customer diversification programmes.
It said Unisem's major customer, MPS, started its maiden volume production at Unisem Ipoh in July as part of its "China + 1 strategy.".
"We believe Unisem will be a major beneficiary of this customer's plan to diversify its production outside of China, given that the latter still relies heavily on its back-end capacity in China.
"We estimate these three new programmes to contribute an additional US$10-15 million in revenue in 2H24," it said.
It added Unisem Ipoh's utilisation remains low, hovering at around 50 per cent in Q2 2024, amidst mixed customer outlooks.
The group expects a gradual demand recovery from Unisem Ipoh's customers, who are primarily involved in RF and power modules serving the consumer and communication segments.
"Therefore, we do not expect a significant recovery from Unisem Ipoh's operations in the 2H24."
The firm cut its earnings per share forecasts for financial year 2024 (FY24), FY25, and FY26 by seven to 26 per cent as it lowered its sales growth assumptions.
It maintained 'Hold' on the stock with a slightly higher target price of RM3.98.