UWC Berhad’s Q3 FY2025 Report: Riding the Semiconductor Wave Amidst Evolving Challenges
Greetings, fellow investors and market enthusiasts! Today, we’re diving deep into the latest financial revelations from UWC Berhad, a prominent player in Malaysia’s precision engineering sector. Their unaudited consolidated report for the third quarter ended 30 April 2025 has just landed, and it paints a picture of significant growth driven by a recovering semiconductor market, though not without its own set of challenges.
UWC Berhad has delivered an impressive performance, showcasing robust increases in both revenue and profit for the quarter and year-to-date. This growth underscores the company’s strategic positioning within key high-tech industries. However, a closer look also reveals the impact of rising operational costs and foreign exchange fluctuations, which demand our attention. Let’s unpack the numbers and see what’s truly driving UWC’s trajectory.
Core Data Highlights: A Closer Look at Performance
Quarterly Performance: Strong Rebound
UWC Berhad’s third quarter (Q3 FY2025) results demonstrate a powerful rebound, particularly when compared to the same period last year. The surge in revenue and profit is a clear indicator of the recovering semiconductor market, a sector where UWC has significant exposure.
Q3 FY2025 (Ended 30 April 2025)
Revenue: RM95.6 million
Profit Before Tax (PBT): RM9.8 million
Net Profit (Profit for the financial period): RM7.9 million
Profit Attributable to Owners of the Parent: RM7.96 million
Basic Earnings Per Share (EPS): 0.72 sen
Q3 FY2024 (Ended 30 April 2024)
Revenue: RM66.0 million
Profit Before Tax (PBT): RM6.5 million
Net Profit (Profit for the financial period): RM3.6 million
Profit Attributable to Owners of the Parent: RM4.02 million
Basic Earnings Per Share (EPS): 0.36 sen
This translates to a remarkable 44.8% increase in revenue and a significant 49.3% jump in Profit Before Tax compared to the corresponding quarter last year. Net Profit saw an even more impressive 118.7% surge, while Basic EPS doubled with a 100% increase, reaching 0.72 sen from 0.36 sen.
Sequential Performance: Navigating Headwinds
While the year-on-year comparison is robust, looking at the immediate preceding quarter (Q2 FY2025 ended 31 January 2025) reveals some operational challenges.
| Individual Quarter (RM’000) | 30 April 2025 (Q3 FY2025) | 31 January 2025 (Q2 FY2025) | Difference (RM’000) | Percentage Change (%) |
|---|---|---|---|---|
| Revenue | 95,564 | 92,397 | 3,167 | 3.4% |
| Profit Before Tax (PBT) | 9,757 | 14,031 | (4,274) | (30.5%) |
| Profit for the financial period | 7,946 | 10,115 | (2,169) | (21.4%) |
| Profit attributable to owners of the parent | 7,956 | 9,691 | (1,735) | (17.9%) |
Revenue saw a modest 3.4% increase, indicating a gradual recovery in the semiconductor industry. However, Profit Before Tax declined by 30.5%. This was primarily attributed to higher staff costs due to increased headcount and share grant expenses. Additionally, the appreciation of the Malaysian Ringgit resulted in a foreign exchange loss of RM4.3 million for the quarter, further impacting profitability.
Cumulative Performance: Strong Year-to-Date Growth
For the nine months ended 30 April 2025 (9M FY2025), UWC Berhad has delivered impressive year-to-date growth:
- Revenue: RM277.4 million, a substantial 60.7% increase from RM172.6 million in the same period last year.
- Profit Before Tax (PBT): RM32.2 million, nearly doubling with a 92.7% increase from RM16.7 million.
- Net Profit: RM24.4 million, a remarkable 106.2% increase from RM11.8 million.
- Basic EPS: 2.19 sen, up from 1.20 sen, representing an 82.5% improvement.
These figures highlight UWC’s strong underlying business momentum over the longer term, driven by sustained demand in its core segments.
Business Unit Performance: Diversified Strengths
UWC’s revenue streams are diversified across various industries within its precision sheet metal fabrication and machined components segment (Segment II):
- Semiconductor: Contributed RM163.2 million to external revenue.
- Life Science and Medical Technology: Generated RM59.8 million.
- Other Industries: Accounted for RM54.4 million.
The semiconductor segment remains the largest contributor, reinforcing its critical role in the company’s overall performance.
Financial Health: Balance Sheet & Cash Flow
As of 30 April 2025, UWC’s financial position shows expansion:
- Total Assets: Increased by RM51.8 million (or 10.0%) to RM570.6 million from RM518.8 million at 31 July 2024. This was primarily driven by a significant increase in Property, Plant and Equipment (up by RM49.6 million or 33.9%), reflecting ongoing capacity expansion.
- Total Equity: Rose by RM25.2 million (or 5.6%) to RM478.3 million.
- Total Liabilities: Increased by RM26.6 million (or 40.5%) to RM92.3 million, mainly due to higher trade and other payables and new borrowings (RM9.0 million in banker acceptance and revolving credit).
On the cash flow front, the picture has shifted:
- Net cash used in operating activities: RM13.3 million outflow for 9M FY2025, compared to a net inflow of RM11.5 million in the same period last year. This shift is notable and warrants attention, possibly linked to increased working capital requirements (inventories and receivables).
- Net cash used in investing activities: Increased to RM44.9 million outflow (from RM25.0 million last year), largely due to substantial purchases of property, plant and equipment, aligning with their capacity expansion plans.
- Net cash from financing activities: Shifted to a RM7.6 million inflow (from an outflow of RM3.6 million last year), primarily from new borrowings.
- Consequently, Cash and cash equivalents at period end significantly decreased to RM26.3 million from RM80.8 million at the start of the period.
The increased investment in property, plant, and equipment, coupled with higher inventories and receivables, suggests that UWC is actively building up its operational capacity to meet anticipated demand, even if it impacts short-term cash flow from operations.
Risks and Prospects: Navigating the Future Landscape
Global Economic Outlook and Industry Trends
The global economic landscape remains a mixed bag. While Bank Negara Malaysia (BNM) projects continued global growth in 2025, supported by positive labor markets and less restrictive monetary policies, concerns linger. The escalation of trade tensions, particularly new tariff measures, could soften the global growth outlook and impact Malaysia’s economy through trade channels. Inflation is expected to remain moderate.
However, the global semiconductor market offers a brighter forecast. World Semiconductor Trade Statistics projects an 11.2% expansion in 2025, primarily driven by robust double-digit growth in the Logic and Memory segments. Regionally, the Americas and Asia Pacific are expected to lead this growth.
UWC’s Strategic Vision
Despite the broader economic uncertainties, UWC maintains an optimistic outlook for its business and the industries it operates in. The company is actively observing signs of recovery and is focused on several key strategies:
- Capacity Expansion: UWC is undertaking significant production capacity expansion and new construction projects. This includes new clean room facilities to cater to more front-end semiconductor businesses, and projects for electric vehicle (EV) components. This focus on capital expenditure aims to position the Group for substantial growth and long-term value creation in the front-end semiconductor business.
- Semiconductor Sector Focus: The Group has strategically ventured into front-end semiconductor engineering, securing modules and working on project transfers and new product development. With the significant growth in Artificial Intelligence (AI) driving demand for high-performance AI chips, UWC is positioning itself to become a leading provider of cutting-edge front-end equipment for AI chip production.
- Life Science and Medical Technology: UWC sees long-term benefits in this sector, particularly with advancements in new technologies like vaccines for cancer and therapeutic treatments. The company continues to develop products like virus extraction machines, DNA analysers, and cell electroporation instruments. They are also securing more box-build jobs and have become a preferred supplier for safe patient handling, mobility products, surgical workflow, and precision positioning items. This segment is expected to continue its strong growth.
- Other Industries: UWC remains committed to its presence in 5G network equipment, autonomous vehicle-related chip testers, and EV battery testers, maintaining a stable position in these evolving sectors.
Summary and Investment Recommendations
UWC Berhad’s latest quarterly report showcases a company actively leveraging the recovering semiconductor market and strategically investing in future growth areas. The strong year-on-year revenue and profit growth indicate a healthy demand for its precision engineering services, particularly in the semiconductor and life science sectors. The significant capital expenditure on capacity expansion and new construction projects underscores management’s confidence in long-term opportunities, especially in the front-end semiconductor and EV segments.
However, investors should also be mindful of the challenges reflected in the sequential quarter’s performance. Increased operating costs, particularly staff expenses, and the impact of foreign exchange fluctuations have weighed on profitability in the short term. The shift to negative operating cash flow also bears watching, though it may be a temporary effect of aggressive expansion and increased working capital needs.
Key points to consider moving forward:
- The cyclical nature of the semiconductor and electronics industries means that UWC’s performance will remain sensitive to global economic shifts and technology cycles.
- Global trade tensions and broader economic slowdowns could impact overall demand for the company’s products and services, potentially affecting future growth rates.
- Managing rising operational costs, including staff expenses, and mitigating foreign exchange volatility will be crucial for sustaining profit margins.
- The successful execution of their ambitious capacity expansion plans and the timely securing of new projects and customers will be key determinants of future profitability.
Overall, UWC Berhad appears to be on a path of strategic growth, diversifying its portfolio while doubling down on high-potential segments. The coming quarters will be critical in observing how these strategies translate into sustained profitability and improved cash flow.
What Are Your Thoughts?
UWC Berhad is clearly positioning itself for the future, but the path ahead is not without its complexities. Do you think the company’s aggressive capacity expansion and focus on front-end semiconductor and EV segments will pay off significantly in the long run? How do you view the impact of rising costs and foreign exchange on their profitability?
Share your insights and perspectives in the comments section below!
For more in-depth analyses of Malaysian companies, stay tuned to our blog.
