KUALA LUMPUR (Dec 19): UWC Bhd found itself among the top losers on Tuesday as its share price fell 13 sen or 3.65% to a low of RM3.43, after the group’s first quarter results ended Oct 31, 2023 (1QFY2024) missed consensus’ estimates.

At the time of writing, the counter pared its losses to RM3.54 — down two sen or 0.56% — giving it a market capitalisation of RM3.9 billion.

UWC’s share price has fallen over 10% since the start of the year and 16% in the past year.

The group’s net profit for 1QFY2024 dropped 85.12% to RM4.35 million from RM29.25 million a year earlier as revenue declined 51% to RM45.46 million from RM92.12 million, which the group blamed on the impact of macroeconomic headwinds, especially the semiconductor market cyclical downturn.

In a note on Tuesday, Hong Leong Investment Bank (HLIB) Bank Bhd said UWC’s 1QFY2024 revenue of RM46 million yielded a core net profit of RM1 million — which missed expectations — was only 1% of the research house's or consensus’ full-year forecasts. The deviation was due to lower-than-expected lower revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) margin.

As a result, the research firm lowered its forecast for UWC’s core profit after tax and minority interests (Patami) for the financial year ending July 31, 2024 (FY2024) by 16%, and for FY2025 by 1%.

“[We] reiterate ‘hold’ with a lower target price (TP) of RM3.24 (previously RM3.27), reflecting our downward earnings revisions. Our TP is pegged to unchanged PE (price-earnings) multiple of 34x of FY2025 EPS (earnings per share),” it said.

“At current juncture, we think the risk-reward is fair despite the ongoing trade intensity [which] may eventually benefit UWC which provides a one-stop solution as more companies shift productions out of China to avoid import tariffs,” the research firm added.

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