UWC: Growth Outlook Reinforced by Strong Order Book and Strategic Expansion
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Performance Review
The company’s outlook is robust, underpinned by strong performance across both its front-end and back-end segments. The firm has secured a record-high order book of RM200 million, providing approximately two quarters of earnings visibility. The semiconductor sector remains a key driver, with front-end (FE) and back-end (BE) operations contributing 35% and 53% of the order book, respectively. This strength is largely driven by sustained demand from its largest FE customer.
Operational Strengths and Strategic Growth
The company continues to benefit from higher in-house value-add for chamber-related orders, which anchors margins. A growing contribution from mechatronics is also expected to enhance capabilities and expand market opportunities. Capacity expansion plans are progressing as scheduled, with 14 new machines worth RM10 million recently placed. Further upside is anticipated from new mechatronics assembly orders and accelerated ramp-ups from two key customers in the second half of FY26, coinciding with the new factory’s slated completion by January 2026.
Sustained Back-End Momentum
The back-end segment maintains strong momentum, supported by stable test handler production for its largest BE customer, with output currently at 15 units per week and expected to increase to 20 units. Furthermore, the company is developing a newer test handler model for this customer, with potential for higher average selling prices (ASPs) than the current RM200,000 level. Notably, the company’s previous largest BE customer has re-engaged, contributing 13% to the current order book with new chip tester platforms, with a ramp-up anticipated in 2HFY26, subject to resolution of near-term supply chain constraints.
Investment Outlook
The investment bank maintains its BUY rating on the stock with an unchanged 12-month target price of RM4.98. This valuation is based on a target PE multiple on CY26E EPS. The positive earnings outlook and anticipated share price re-rating underpin the recommendation. Key downside risks include weaker-than-expected demand, significant appreciation of the Malaysian Ringgit, and lower-than-expected margins.
