UWC Berhad (UWC MK)
Seeing all-round improvement
MALAYSIA | TECHNOLOGY | UPDATE
- Stronger front-end outlook driven by better yields and expanding capabilities
- Back-end and life science segments face policy risk, but upside seen from new models and customer relocation
- Maintain BUY with an unchanged TP of RM2.60
FE activities gaining momentum
UWC’s front-end outlook remains positive, supported by rising yields, expanding capabilities, and firm demand. Management shared that production yield has improved to c.65% (from 60% in 3QFY25) and is now sustainable without external consultancy support, which previously cost US$1m/quarter (RM4.2m at US$1:RM4.20). The cost savings are expected to be reflected from 1QFY26 onwards. The group recently added four 5-axis CNC machines to enhance its fabrication capabilities, allowing to meet more complex FE requirements. Overall demand remains healthy, with increased loading expected over the next 2 months. Its largest FE customer is projected to contribute 30-35% of group revenue and remain the key growth driver in FY26. The ground floor of Building 6 is currently occupied for chamber production, with the customer expected to fully take up the entire facility.
New models and customer relocation could drive a better BE outlook
Tariff risks weigh more heavily on the BE segment, given its 20% exports exposure to the US, which has led to delivery deferrals amid ongoing trade discussions. While the outlook from its largest BE customer remains subdued, the anticipated relocation of operations is expected to spur incremental demand from higher test requirements. Separately, UWC’s weekly test handler orders from another customer have increased from 6 units in Apr25 to 8 units in Jul25, with management expecting new model introductions to further lift volumes to 10-12 units over the next 2 months. We expect the incremental revenue contributions to materialise in 1HFY26, with both BE customers accounting for a combined 30% of the total group’s revenue in FY26.
Maintain BUY and TP of RM2.60
We maintain our earnings forecast, BUY rating, and 12-month TP of RM2.60, based on a target PE multiple on FY26E EPS. We remain optimistic on the group’s prospects in tandem with improved execution, deeper technical capabilities, and robust order flows. Key downside risks: prolonged semiconductor sector downturn, continued order delay by its key customers, weaker US$ against RM, and softer-than-expected margins.
Chart: PRICE VS. FBMKLCI
This chart shows the stock price performance of UWC MK EQUITY against the FBMKLCI Index from July 2024 to July 2025. The UWC stock shows significant volatility, with a low around 1.5 and a high near 3.0, ending the period higher than it started. The FBMKLCI index shows a more stable, slightly upward trend over the same period.
Source: Bloomberg
Jianyuan TAN, FCCA
tan.jianyuan@phillipcapital.com.my
Jin Wei LAM
lam.jinwei@phillipcapital.com.my
Key Financials
Y/E Jul | FY23 | FY24 | FY25E | FY26E | FY27E |
---|---|---|---|---|---|
Revenue (RMm) | 271.7 | 248.7 | 353.1 | 388.5 | 427.3 |
EBITDA (RMm) | 83.2 | 36.9 | 82.8 | 145.1 | 172.3 |
Pretax profit (RMm) | 67.9 | 19.3 | 59.8 | 116.3 | 139.8 |
Net profit (RMm) | 55.0 | 15.2 | 46.0 | 89.6 | 107.6 |
EPS (sen) | 5.0 | 1.4 | 4.2 | 8.1 | 9.8 |
PER (x) | 37.9 | 136.7 | 45.2 | 23.3 | 19.3 |
Core net profit (RMm) | 54.7 | 15.2 | 46.0 | 89.6 | 107.6 |
Core EPS (sen) | 5.0 | 1.4 | 4.2 | 8.1 | 9.8 |
Core EPS growth (%) | (45.6) | (72.2) | 202.1 | 94.6 | 20.2 |
Core PER (x) | 38.1 | 136.7 | 45.2 | 23.3 | 19.3 |
Net DPS (sen) | – | – | – | 1.6 | 2.0 |
Dividend Yield (%) | – | – | – | 0.9 | 1.0 |
EV/EBITDA (x) | 23.9 | 57.9 | 24.7 | 13.7 | 11.2 |
Chg in EPS (%) | |||||
Phillip/Consensus (%) | – | – | 0.9 | 1.1 | 1.0 |
Sources: Company, Bloomberg, Phillip Research forecasts
Supporting Charts & Data
Table 1: Segmental revenue (RMm)
Quarter | Semiconductor | Life science and medical technology | Others | Total |
---|---|---|---|---|
4QFY23 | 20.6 | 14.2 | 5.2 | 40.0 |
1QFY24 | 23.4 | 14.4 | 7.6 | 45.4 |
2QFY24 | 28.1 | 17.1 | 15.9 | 61.1 |
3QFY24 | 30.0 | 17.9 | 18.1 | 66.0 |
4QFY24 | 37.4 | 19.6 | 19.1 | 76.1 |
1QFY25 | 50.2 | 20.2 | 19.0 | 89.4 |
2QFY25 | 53.1 | 21.2 | 18.1 | 92.4 |
3QFY25 | 59.9 | 18.4 | 17.3 | 95.6 |
Source: Company, Phillip Research
Table 2: Quarterly core net profit (RMm) and margin (%)
Quarter | Core Net Profit (RMm) | Core Net Margin (%) |
---|---|---|
4QFY23 | (0.0) | 1.7 |
1QFY24 | 2.7 | 4.5 |
2QFY24 | 4.1 | 3.8 |
3QFY24 | 6.7 | 7.3 |
4QFY24 | 8.8 | 8.8 |
1QFY25 | 11.2 | 9.8 |
2QFY25 | 13.0 | 12.1 |
3QFY25 | 13.6 | 12.1 |
Source: Company, Phillip Research
Table 3: UWC’s 5-year PE (x)
The 5-year Price-to-Earnings (PE) ratio chart indicates significant fluctuation. The key statistical levels are:
- +2SD: 179x
- +1SD: 130.6x
- Average: 82.2x
- -1SD: 33.7x
- -2SD: -14.7x
Source: Company, Phillip Research forecasts
Financials
Income Statement
Y/E Jul (RMm) | FY23 | FY24 | FY25E | FY26E | FY27E |
---|---|---|---|---|---|
Revenue | 272 | 249 | 353 | 388 | 427 |
Operating expenses | (189) | (212) | (270) | (243) | (255) |
EBITDA | 83 | 37 | 83 | 145 | 172 |
Depreciation | (18) | (21) | (25) | (30) | (36) |
EBIT | 65 | 16 | 57 | 115 | 136 |
Net int income/(expense) | 3 | 4 | 2 | 2 | 4 |
Exceptional gains / (losses) | 0 | (0) | 0 | 0 | 0 |
Associates’ contribution | 0 | 0 | 0 | 0 | 0 |
Pretax profit | 68 | 19 | 60 | 116 | 140 |
Tax | (14) | (6) | (15) | (29) | (35) |
Minority interest | 1 | 2 | 1 | 2 | 3 |
Net profit | 55 | 15 | 46 | 90 | 108 |
Core net profit | 55 | 15 | 46 | 90 | 108 |
Balance sheet
Y/E Jul (RMm) | FY23 | FY24 | FY25E | FY26E | FY27E |
---|---|---|---|---|---|
Fixed assets | 127 | 147 | 182 | 218 | 250 |
Other long term assets | 48 | 53 | 56 | 59 | 63 |
Total non-current assets | 176 | 199 | 238 | 277 | 313 |
Cash and equivalents | 96 | 81 | 69 | 122 | 178 |
Stocks | 63 | 67 | 86 | 66 | 73 |
Debtors | 75 | 106 | 145 | 160 | 176 |
Other current assets | 54 | 61 | 52 | 52 | 52 |
Total current assets | 288 | 314 | 352 | 399 | 478 |
Creditors | 26 | 39 | 35 | 27 | 30 |
Short term borrowings | 0 | 0 | 8 | 8 | 8 |
Other current liabilities | 2 | 2 | 6 | 6 | 7 |
Total current liabilities | 28 | 41 | 49 | 41 | 44 |
Long term borrowings | 1 | 0 | 0 | 0 | 0 |
Other long term liabilities | 13 | 19 | 41 | 43 | 45 |
Total long term liab. | 14 | 19 | 41 | 43 | 45 |
Shareholders’ Funds | 420 | 435 | 481 | 571 | 679 |
Minority Interest | 2 | 18 | 19 | 21 | 24 |
Cash Flow Statement
Y/E Jul (RMm) | FY23 | FY24 | FY25E | FY26E | FY27E |
---|---|---|---|---|---|
Pretax Profit | 68 | 19 | 60 | 116 | 140 |
Depreciation & amortisation | 18 | 21 | 25 | 30 | 35 |
Working capital changes | 47 | (27) | (42) | (2) | (20) |
Cash tax paid | (34) | (22) | (15) | (29) | (35) |
Others | 37 | 14 | (11) | 5 | 36 |
C/F from operation | 136 | 5 | 17 | 121 | 156 |
Capex | (31) | (32) | (64) | (69) | (71) |
Others | (15) | 14 | 7 | 1 | (10) |
C/F from investing | (46) | (17) | (57) | (68) | (82) |
Debt raised/(repaid) | (0) | (1) | 8 | 0 | 0 |
Dividends paid | (32) | 0 | 0 | 0 | (18) |
Others | (2) | (0) | 20 | (0) | (0) |
C/F from financing | (34) | (1) | 28 | (0) | (18) |
Net change in cash flow | 56 | (14) | (12) | 52 | 56 |
Free Cash Flow | 105 | (27) | (47) | 51 | 85 |
Source: Company, Phillip Research forecasts
Contact Information
SINGAPORE
Phillip Securities Pte Ltd
Raffles City Tower
250, North Bridge Road #06-00
Singapore 179101
Tel +65 6533 6001
Fax +65 6535 6631
Website: www.poems.com.sg
MALAYSIA
Phillip Capital Sdn Bhd
B-18-6 Block B Level 18 Unit 6 Megan Avenue II,
No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur
Tel +603 2783 0300
Fax +603 2166 5099
Website: www.phillip.com.my
HONG KONG
Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway
Hong Kong
Tel +852 2277 6600
Fax +852 2868 5307
Website: www.phillip.com.hk
JAPAN
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4-2 Nihonbashi Kabuto-cho Chuo-ku,
Tokyo 103-0026
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Fax +81-3 3666 6090
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INDONESIA
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CHINA
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THAILAND
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Bangkok 10500 Thailand
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Fax +66-2 22680921
Website www.phillip.co.th
FRANCE
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Paris France
Tel +33-1 45633100
Fax +33-1 45636017
Website: www.kingandshaxson.com
UNITED KINGDOM
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6th Floor, Candlewick House,
120 Cannon Street,
London, EC4N 6AS
Tel +44-20 7426 5950
Fax +44-20 7626 1757
Website: www.kingandshaxson.com
UNITED STATES
Phillip Capital Inc
141 W Jackson Blvd Ste 3050
The Chicago Board of Trade Building
Chicago, IL 60604 USA
Tel +1-312 356 9000
Fax +1-312 356 9005
Website: www.phillipusa.com
AUSTRALIA
Phillip Capital Limited
Level 10, 330 Collins Street
Melbourne, Victoria 3000, Australia
Tel +61-03 8633 9803
Fax +61-03 8633 9899
Website: www.phillipcapital.com.au
CAMBODIA
Phillip Bank Plc
Ground Floor of B-Office Centre, #61-64,
Norodom Blvd Corner Street 306, Sangkat
Boeung Keng Kang 1, Khan Chamkamorn,
Phnom Penh, Cambodia
Tel: 855 (0) 7796 6151/855 (0) 1620 0769
Website: www.phillipbank.com.kh
INDIA
PhillipCapital (India) Private Limited
No.1, 18th Floor, Urmi Estate
95, Ganpatrao Kadam Marg
Lower Parel West, Mumbai 400-013
Maharashtra, India
Tel:+91-22-2300 2999/Fax:+91-22-2300 2969
Website: www.phillipcapital.in
TURKEY
PhillipCapital Menkul Degerler
Dr. Cemil Bengü Cad. Hak Is Merkezi
No. 2 Kat. 6A Caglayan
34403 Istanbul, Turkey
Tel: 0212 296 84 84
Fax: 0212 233 69 29
Website: www.phillipcapital.com.tr
DUBAI
Phillip Futures DMCC
Member of the Dubai Gold and
Commodities Exchange (DGCX)
Unit No 601, Plot No 58, White Crown Bldg,
Sheikh Zayed Road, P.O.Box 212291
Dubai-UAE
Tel: +971-4-3325052 / Fax: + 971-4-3328895
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