Stock Name: UNISEM
Company Name: UNISEM (M) BHD
Research House: MIDF
Semiconductor sector
Maintain positive: Global semiconductor sales continued their strong growth in February 2011, with an increase of 13.6% year-on-year to US$25.2 billion (RM76.1 billion) as reported by the Semiconductor Industry Association (SIA). The double-digit improvement came on the back of strong growth in the Americas, with 26.6% y-o-y growth. We were pleasantly surprised that Europe came in second in terms of growth, with an increase of 13.3% y-o-y. Asia-Pacific registered an 11.8%y-o-y growth while Japan grew by 6.1% y-o-y.
Asia-Pacific remains the biggest contributor with 53.9% or US$13.6 billion, followed by the Americas, Japan and Europe, with a contribution of 18.6%, 14.6% and 12.9% respectively.
In terms of month-on-month (m-o-m) growth, February saw a marginal decline of 1.1% m-o-m as Japan registered a higher decline of 3.9% m-o-m compared with 3.5% in January. Other regions also registered a decline, but only marginally for the Americas and Japan, with a decline of 0.3% m-o-m and 0.5% m-o-m respectively. ''
Europe posted a decline of 1.4% m-o-m. However, we are not worried by the slight decline in February as it is in line with historical trends. We expect a pickup in m-o-m growth in March for all regions except Japan.
We expect Japan will continue to see a decline in March due to the tsunami and earthquake.
We understand that SIA is maintaining its forecast for 2011/12, with worldwide chip sales estimated at US$318.7 billion and US$329.7 billion respectively. This represents a 6.8% and 3.5% y-o-y growth for CY11 and CY12. We are maintaining our growth estimates of 5% y-o-y in global sales in 2011.
We remain positive on the sector given its firm growth supported by the recent influx and popularity of smart gadgets, with the tablet being the key driver for CY11. Book-to-bill (BTB) ratio improved to 0.87 in February from 0.85 in January, which we believe signals expectations by semiconductor producers of a ramp-up in 2Q11 onwards.
The BTB ratio represents bookings and billings of semiconductor manufacturing equipment. We believe Japan will continue to see a decline in 2Q11, given the impact of the March 11 natural disaster, and will moderate the overall growth in global sales.
We continue to like Unisem (M) Bhd ('buy'; target price: RM2.80) as we believe it will benefit the most from the growth in tablets due to its securing of a Tier 1 customer, which is a supplier to Apple. We expect that this will bring in better earnings before interest and taxes margin improvement in addition to improvement in margins due to better utilisation of its plants. ' MIDF Research, April 6
This article appeared in The Edge Financial Daily, April 7, 2011.
Company Name: UNISEM (M) BHD
Research House: MIDF
Semiconductor sector
Maintain positive: Global semiconductor sales continued their strong growth in February 2011, with an increase of 13.6% year-on-year to US$25.2 billion (RM76.1 billion) as reported by the Semiconductor Industry Association (SIA). The double-digit improvement came on the back of strong growth in the Americas, with 26.6% y-o-y growth. We were pleasantly surprised that Europe came in second in terms of growth, with an increase of 13.3% y-o-y. Asia-Pacific registered an 11.8%y-o-y growth while Japan grew by 6.1% y-o-y.
Asia-Pacific remains the biggest contributor with 53.9% or US$13.6 billion, followed by the Americas, Japan and Europe, with a contribution of 18.6%, 14.6% and 12.9% respectively.
In terms of month-on-month (m-o-m) growth, February saw a marginal decline of 1.1% m-o-m as Japan registered a higher decline of 3.9% m-o-m compared with 3.5% in January. Other regions also registered a decline, but only marginally for the Americas and Japan, with a decline of 0.3% m-o-m and 0.5% m-o-m respectively. ''
Europe posted a decline of 1.4% m-o-m. However, we are not worried by the slight decline in February as it is in line with historical trends. We expect a pickup in m-o-m growth in March for all regions except Japan.
We expect Japan will continue to see a decline in March due to the tsunami and earthquake.
We understand that SIA is maintaining its forecast for 2011/12, with worldwide chip sales estimated at US$318.7 billion and US$329.7 billion respectively. This represents a 6.8% and 3.5% y-o-y growth for CY11 and CY12. We are maintaining our growth estimates of 5% y-o-y in global sales in 2011.
We remain positive on the sector given its firm growth supported by the recent influx and popularity of smart gadgets, with the tablet being the key driver for CY11. Book-to-bill (BTB) ratio improved to 0.87 in February from 0.85 in January, which we believe signals expectations by semiconductor producers of a ramp-up in 2Q11 onwards.
The BTB ratio represents bookings and billings of semiconductor manufacturing equipment. We believe Japan will continue to see a decline in 2Q11, given the impact of the March 11 natural disaster, and will moderate the overall growth in global sales.
We continue to like Unisem (M) Bhd ('buy'; target price: RM2.80) as we believe it will benefit the most from the growth in tablets due to its securing of a Tier 1 customer, which is a supplier to Apple. We expect that this will bring in better earnings before interest and taxes margin improvement in addition to improvement in margins due to better utilisation of its plants. ' MIDF Research, April 6
This article appeared in The Edge Financial Daily, April 7, 2011.
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