by SHAFIQQUL ALIFF / pic source: unisemgroup.com

MIDF Amanah Investment Bank Bhd (MIDF Research) positive on Unisem (M) Bhd’s new semiconductor production facility on 28.5 acres (11.53ha) of industrial land in Gopeng, Perak called the Gopeng Plant.

The 57,000 sq m built up area of Phase 1 Gopeng Plant is expected to be completed in April 2023 with an estimated cost of RM300m.

It is expected to serve the needs of Unisem customers with a broad portfolio of products and services once it is completed with facilities and latest state-of-the-art equipment.

“We are positive on the development as it will allow Unisem to double its existing production capacity. Yet, we keep our earnings estimates unchanged pending further information from management on the expansion timeline,” MIDF Research said in a note yesterday.

It maintained target price at RM4.33, premised on pegging on financial year 2022 earnings per share of 15.8 sen against unchanged price earning ratio (PER) of 27.4 times which represents a slight premium to the company’s two-year average rolling PER of 23.9 times.

“We think strong demand across the products and services especially on wafer level packaging and micro-electro-mechanical systems validates its premium valuation,” the research outfit said.

However, MIDF Research said it is sanguine on Unisem’s near-to-medium term outlook as the group is prepared to seize the growing proliferation of 5G and IoT on the back of its clear order visibility coupled with strong demand remaining across all market segments, including power management, radio frequency, consumer electronics and automotive.

“We also remain optimistic on the growth prospect due to its expansion plans to monetise on robust chip demand coupled with strategic presence in China via its partnership with Tianshui Huatian Technology Co Ltd.

All factors considered, MIDF Research maintains ‘Buy’ call recommendation for Unisem with an upside of 43.5%.