1 August 2025
Unisem (M) (UNI MK): Record-High Revenue But Lacklustre Bottomline; BUY
Technology | Semiconductors
- Stay BUY and MYR2.93 TP, 26% upside and c.4% yield. Despite posting a record-high revenue in 2Q25, Unisem’s core earnings came in below expectations, impacted by elevated pre-operating costs and loss-making Malaysian operations. Management remains confident of sustained demand into 3Q25, with flattish-to-higher QoQ loadings driven primarily by its Chengdu plant. We continue to like the stock for its semiconductor exposure, and anticipate earnings to rebound once the Malaysian plant utilisation improves and cost structures normalise – unlocking operating leverage.
- Earnings miss despite topline beat. 1H25 revenue rose 18.4% YoY to MYR898.8m, exceeding expectations. However, core net profit of MYR7.3m (-72.7% YoY) was weak, achieving just 6.6% and 9.6% of our and consensus full-year forecasts. EBITDA was flattish YoY, with margins down to 15.8% from 18.7% due to pre-operating expenses for Gopeng plant and more than MYR20m losses at the Malaysian operations (including Unisem-Advanpack Technologies (UAT), compounded by a higher-than-expected effective tax rate. Chengdu now contributes c.65% of group revenue. A second interim dividend of MYR0.02/share (flat YoY) was declared.
- 2Q25 revenue hits record high, but costs drag profitability. USD-denominated revenue grew for a fifth consecutive quarter, up 15.1% QoQ to a record USD110.6m – driven by broad-based strength in Chengdu operations (except communications). However, core earnings contracted 30.5% QoQ and 79% YoY to MYR3m due to the loss-making Malaysian segment, elevated Gopeng start-up costs, rising headcount, and increased depreciation charges. Total headcount rose to 7,181 (from 6,814 in 1Q25) to support volume ramp-up. 2Q25 capex reached another record at MYR185.6m, primarily for Chengdu Phase 3 expansion.
- Outlook. Guidance points to a flattish to higher QoQ revenue, supported by resilient demand in MEMS microphones, PMICs for servers, and EV-related applications. Notably, automotive customer loadings have increased over the past two quarters and are expected to remain firm in 2H25. A major customer is also accelerating its relocation to new facilities amid geopolitical shifts. While Chengdu will likely maintain high utilisation, Malaysian operations remain sub-optimal, weighed down by customer caution over tariff uncertainties. The Gopeng plant qualifications are ongoing, with all leadless packages to be relocated there. The Simpang Pulai facility will focus on leaded packages, wafer-level-chip-scale-packaging (WLCSP), and dedicated lines.
- We cut FY25-27F earnings by 51%, 22% and 9% as we bake in lower margin and higher depreciation and cost assumptions. Our TP is kept at MYR2.93 after rolling forward our valuation base year to FY26F, pegged to an unchanged 30x FY26F P/E (+1.5SD from its 5-year mean), inclusive of a 2% ESG premium. Downside risks: Slower-than-expected orders, technology obsolescence, and unfavourable FX movement.
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 1,440 | 1,581 | 1,730 | 1,890 | 2,037 |
| Recurring net profit (MYRm) | 80 | 54 | 54 | 155 | 232 |
| Recurring net profit growth (%) | (67.5) | (33.0) | 1.1 | 183.6 | 49.9 |
| Recurring P/E (x) | 46.71 | 69.72 | 68.97 | 24.32 | 16.22 |
| P/B (x) | 1.6 | 1.7 | 1.7 | 1.6 | 1.6 |
| P/CF (x) | 10.33 | 14.98 | 14.11 | 10.14 | 8.17 |
| Dividend Yield (%) | 3.4 | 3.4 | 1.4 | 3.1 | 4.3 |
| EV/EBITDA (x) | 11.55 | 13.50 | 10.92 | 8.08 | 6.37 |
| Return on average equity (%) | 2.7 | 1.4 | 2.4 | 6.8 | 10.0 |
| Net debt to equity (%) | net cash | net cash | net cash | net cash | net cash |
Source: Company data, RHB
Emissions And ESG
Trend analysis
Overall greenhouse gas (GHG) emissions increased in 2024 from the previous year, due to higher utilisation and production activities. Nonetheless, GHG emissions intensity rose slightly, as production during the year involved more products that required more sophisticated assembly methods and a higher amount of electricity. 24% of the group’s energy consumption is derived from renewable sources.
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | 2 | 2 | 5 | – |
| Scope 2 | 145 | 117 | 122 | – |
| Scope 3 | – | 0 | 34 | – |
| Total emissions | 147 | 119 | 161 | na |
Source: Company data, RHB
Latest ESG-Related Developments
Unisem is listed on the FTSE4Good Bursa Malaysia index, placing it among companies with leading ESG practices and in compliance with the best practice disclosures.
In its bid towards Net Zero by 2050, Unisem has set climate-related targets related to GHG emissions, energy consumption, water consumption and waste generation to reduce consumptions or emissions by 15% from 2020 baseline.
ESG Unbundled
Overall ESG Score: 3.1 (out of 4)
Last Updated: 31 Jul 2025
E Score: 3.0 (GOOD)
The group monitors and manages its greenhouse gas emissions. Key energy consumption reduction initiatives are performed at its sites. In terms of waste management, Unisem aims to achieve a 50% recycling rate of total scheduled waste generated. All of its sites comply to local environmental laws on e-waste handling and practices.
S Score: 3.0 (GOOD)
Unisem has a Safety and Health Policy in place to create a safe and conducive work environment for its employees. Health and safety training are provided to enhance employee safety awareness.
G Score: 3.3 (EXCELLENT)
Unisem has applied and adopted majority of the best practices of the Malaysian Code on Corporate Governance. Nevertheless, we highlight that the Managing Director and Chairman positions are held by the same person. Independent board members represent less than half of the board, while 33% of board members are female directors. Guidance and disclosures from management are notable and have been beneficial to the investment community.
ESG Rating History
[Chart showing ESG rating history from Aug-23 to Aug-25, with ratings fluctuating between 2.9 and 3.1.]
Source: RHB
Financial Exhibits
Key drivers
- New contract wins;
- Higher loadings;
- Weaker MYR vs USD.
Key risks
- Fluctuation in orders;
- Slower-than-expected smartphone sales;
- Stronger MYR vs USD;
- Technology obsolescence.
Company Profile
Unisem is an OSAT player with plants in Ipoh, Perak, Malaysia and Chengdu, China. The company offers a suite of assembly and test services, such as wafer bumping, wafer probing, wafer grinding, a range of leadframe and substrate integrated circuits packaging, wafer level chipscale packaging (CSP), flipchip and radio frequency, analog, digital and mixed-signal testing services.
| Financial summary (MYR) | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Recurring EPS | 0.05 | 0.03 | 0.03 | 0.10 | 0.14 |
| DPS | 0.08 | 0.08 | 0.03 | 0.07 | 0.10 |
| BVPS | 1.48 | 1.39 | 1.39 | 1.42 | 1.46 |
| Return on average equity (%) | 2.7 | 1.4 | 2.4 | 6.8 | 10.0 |
| Valuation metrics | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Recurring P/E (x) | 46.71 | 69.72 | 68.97 | 24.32 | 16.22 |
| P/B (x) | 1.6 | 1.7 | 1.7 | 1.6 | 1.6 |
| FCF Yield (%) | 0.3 | (1.2) | (0.9) | 4.5 | 8.2 |
| Dividend Yield (%) | 3.4 | 3.4 | 1.4 | 3.1 | 4.3 |
| EV/EBITDA (x) | 11.55 | 13.50 | 10.92 | 8.08 | 6.37 |
| EV/EBIT (x) | 38.15 | 68.56 | 40.41 | 18.47 | 12.19 |
| Income statement (MYRm) | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Total turnover | 1,440 | 1,581 | 1,730 | 1,890 | 2,037 |
| Gross profit | 696 | 749 | 821 | 957 | 1,064 |
| EBITDA | 304 | 272 | 344 | 458 | 558 |
| Depreciation and amortisation | (212) | (218) | (251) | (257) | (266) |
| Operating profit | 92 | 53 | 93 | 200 | 291 |
| Net interest | (9) | (7) | (10) | (11) | (9) |
| Pre-tax profit | 84 | 53 | 83 | 190 | 283 |
| Taxation | (18) | (22) | (28) | (35) | (51) |
| Reported net profit | 66 | 32 | 54 | 155 | 232 |
| Recurring net profit | 80 | 54 | 54 | 155 | 232 |
| Cash flow (MYRm) | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Change in working capital | 82 | 5 | (39) | (41) | (38) |
| Cash flow from operations | 364 | 251 | 266 | 371 | 460 |
| Capex | (352) | (297) | (300) | (200) | (150) |
| Cash flow from investing activities | (335) | (281) | (300) | (200) | (150) |
| Dividends paid | (129) | (129) | (54) | (116) | (162) |
| Cash flow from financing activities | (108) | (178) | (39) | (116) | (170) |
| Cash at beginning of period | 556 | 481 | 278 | 197 | 260 |
| Net change in cash | (80) | (208) | (73) | 55 | 140 |
| Ending balance cash | 481 | 267 | 205 | 252 | 400 |
| Balance sheet (MYRm) | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Total cash and equivalents | 481 | 278 | 205 | 260 | 400 |
| Tangible fixed assets | 2,064 | 2,099 | 2,148 | 2,091 | 1,975 |
| Total assets | 2,988 | 2,891 | 2,912 | 2,962 | 3,036 |
| Short-term debt | 90 | 109 | 116 | 116 | 113 |
| Total long-term debt | 141 | 78 | 86 | 86 | 82 |
| Total liabilities | 603 | 644 | 664 | 676 | 681 |
| Total equity | 2,385 | 2,248 | 2,248 | 2,286 | 2,356 |
| Total liabilities & equity | 2,988 | 2,891 | 2,912 | 2,962 | 3,036 |
| Key metrics | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| Revenue growth (%) | (19.2) | 9.8 | 9.4 | 9.3 | 7.8 |
| Recurrent EPS growth (%) | (67.5) | (33.0) | 1.1 | 183.6 | 49.9 |
| Gross margin (%) | 48.4 | 47.4 | 47.5 | 50.7 | 52.2 |
| Operating EBITDA margin (%) | 21.1 | 17.2 | 19.9 | 24.2 | 27.4 |
| Net profit margin (%) | 4.6 | 2.0 | 3.2 | 8.2 | 11.4 |
| Dividend payout ratio (%) | 196.9 | 407.9 | 100.0 | 75.0 | 70.0 |
| Capex/sales (%) | 24.5 | 18.8 | 17.3 | 10.6 | 7.4 |
| Interest cover (x) | 9.77 | 7.68 | 8.97 | 18.69 | 32.63 |
Source: Company data, RHB
Results At a Glance
Figure 1: Results review
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 394.6 | 423.6 | 475.2 | 12.2 | 20.4 | 759.4 | 898.8 | 18.4 | YoY & QoQ: Better loadings from various customers in Chengdu but Malaysian operation remains suboptimal. |
| EBITDA | 72.0 | 71.5 | 70.7 | (1.1) | (1.8) | 141.7 | 142.3 | 0.4 | |
| EBITDA margin (%) | 18.3 | 16.9 | 14.9 | 18.7 | 15.8 | YoY: Loss of economies of scale, higher labour costs, pre-opening expenses for Gopeng plant and unfavourable FX. | |||
| Depreciation & amortisation | (53.1) | (58.8) | (59.8) | (1.7) | (12.6) | (106.1) | (118.6) | (11.7) | |
| EBIT | 19.0 | 12.7 | 11.0 | (13.8) | (42.2) | 35.6 | 23.7 | (33.4) | |
| EBIT margin (%) | 4.8 | 3.0 | 2.3 | 4.7 | 2.6 | ||||
| Interest expense | (0.4) | (2.8) | (2.6) | 5.1 | (495.7) | (1.3) | (5.4) | (320.1) | |
| Interest income | Nm | Nm | Nm | ||||||
| Associates | Nm | Nm | Nm | ||||||
| El/Others | 2.5 | 1.7 | 6.1 | 260.0 | 145.0 | (1.5) | 7.9 | (620.0) | FX gains/losses. |
| Pretax profit | 21.0 | 11.7 | 14.5 | 24.2 | (31.2) | 32.8 | 26.1 | (20.3) | |
| Pretax Margin (%) | 5.3 | 2.8 | 3.0 | 4.3 | 2.9 | ||||
| Tax | (4.3) | (5.7) | (5.3) | 5.5 | (24.6) | (7.6) | (11.0) | (45.1) | Due to loss-making in Malaysian operations. |
| Effective tax rate (%) | (20.4) | (48.5) | (36.9) | (23.1) | (42.1) | ||||
| Minority Interest | Nm | Nm | Nm | ||||||
| Net profit | 16.8 | 6.0 | 9.1 | 52.0 | (45.5) | 25.2 | 15.1 | (40.0) | |
| Core profit | 14.2 | 4.3 | 3.0 | (30.5) | (79.0) | 26.7 | 7.3 | (72.7) | Below expectations. |
| Net Margin (%) | 3.6 | 1.0 | 0.6 | 3.5 | 0.8 |
Source: Company data, RHB
Recommendation Chart
[Line chart showing Recommendations, Target Price, and Price Close from Aug-20 to Feb-25.]
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-04-24 | Buy | 2.9 | 1.9 |
| 2025-04-23 | Buy | 3.0 | 1.9 |
| 2025-03-03 | Buy | 3.3 | 2.1 |
| 2024-10-30 | Buy | 3.7 | 3.0 |
| 2024-10-09 | Buy | 3.9 | 3.1 |
| 2024-07-31 | Buy | 4.4 | 3.6 |
| 2024-04-29 | Buy | 4.4 | 3.8 |
| 2024-04-01 | Buy | 4.4 | 3.8 |
| 2024-02-28 | Buy | 3.7 | 3.3 |
| 2023-10-27 | Neutral | 3.0 | 3.1 |
| 2023-07-28 | Neutral | 3.0 | 3.2 |
| 2023-04-28 | Neutral | 2.9 | 3.0 |
| 2023-02-24 | Buy | 3.8 | 3.1 |
| 2022-10-12 | Buy | 3.4 | 2.4 |
| 2022-07-29 | Buy | 4.2 | 3.0 |
Source: RHB, Bloomberg
