Hong Leong Investment Bank Bhd (HLIB) maintained its BUY call on Unisem (M) Bhd but lowered its target price to RM5.05 from RM5.20 after its 2QFY26 results showed stronger revenue but weaker-than-expected margins.
HLIB said 2QFY26 revenue rose 20% year-on-year to RM570 million, driven by higher volumes across key operations, while core net profit climbed to RM13.3 million from RM3 million a year earlier. However, elevated operating costs and underutilisation at the new Gopeng facility kept margins subdued.
The research house said Gopeng’s new FCQFN and FCLGA lines were operating at around 30% utilisation during the quarter as Unisem and a key customer work through further qualifications. By comparison, its Chengdu plant was running above 80% utilisation across assembly and bumping operations.
HLIB noted that more than 75% of Unisem’s industrial segment comprises power management chips for AI data centres, implying roughly a third of group revenue is now exposed to AI data centre infrastructure.
Management guided for 3QFY26 sales growth of 10% to 15% quarter-on-quarter in US dollar terms, although HLIB believes this could prove conservative given the ongoing analogue upcycle. Customer wafer supply constraints and longer equipment lead times remain bottlenecks.
HLIB cut its FY26 earnings forecast by 33% but raised FY27 and FY28 estimates by 3% each following interest savings from Unisem’s recent private placement. It said the slower margin recovery was a timing issue rather than a structural change, with improving Gopeng utilisation potentially providing stronger operating leverage over the next 12 to 24 months.
As of 11.08 am, the stock price dips 0.22% to RM4.55.
