KUALA LUMPUR (Feb 28): TA Securities has upgraded Unisem (M) Bhd to “hold” at RM3.26 with a higher target price of RM3.56 (from RM2.70), based on 26x CY2025 earnings, on improved sentiment.

In a note on Wednesday, the research house said that Unisem’s FY2023 core profit of RM81.9 million came in within expectations, accounting for 104.9% of the research houses's full-year estimate and 104.5% of consensus estimate.

The research house maintained its FY2024 and FY2025 earnings forecasts, and introduced FY2026 numbers with a projected net profit of RM254.0 million, representing an earnings growth of 14.9%.

TA Securities said as the near-term outlook for the semiconductor industry remains weak, management guided 1QFY2024’s revenue in US dollar terms to be flat quarter-on-quarter.

“Nevertheless, the group expects a rebound in 2H2024, catalysed by: i) anticipation for the semiconductor industry to return to an upcycle, and ii) the ramp up of production for new customers adopting a China Plus One strategy.

“As we expect the sentiment in the semiconductor space to further improve, we take this opportunity to increase the target PE multiple for Unisem from 24x to 26x, which is closely in line with the stock’s 5-year mean,” it said.