Unisem to register strong second half this year

KUALA LUMPUR: Semiconductor assembly and test services provider Unisem (M) Bhd is eyeing 10% revenue growth for the financial year ending Dec 31, 2015 (FY15), supported by higher demand in the smartphone, automotive and censors segments.
Speaking to reporters after the company's AGM here yesterday, its chairman and group managing director John Chia Sin Tet said the group is expected to register a stronger second half based on its customers' forecast data.
"In the next three quarters, we're optimistic that our business will see a double-digit growth," he noted.
On profit growth, he expects it will be higher than the topline growth as many of the operating costs are fixed costs. Its shift towards higher technology packages will also help bring better margins.
According to Chia, the smartphone division contributes 40% to the group's sales, while the automotive and censors segments are at 20%.
Unisem has allocated higher capital expenditure (capex) of RM100 million in FY15, of which RM40 million to RM60 million will be spent by mid-year.
Chia said the capex, which is capped at 33% of the group's earnings before interest, taxes, depreciation and amortisation (ebitda), is to enhance the equipment to increase the production capacity of chipscale, wafer bumping and leadless packages.
"We increased capex this year as we see demand for chipscale packages and wafer bumping to increase as the market continues to adopt these packages," he said.
Chia said the company has no plans to build a new plant considering that it has free factory space of 20% to 25% due to the restructuring it has been pursuing over the past three years.
"We've been having a new business model (that) move from leaded products to chip-scale (which) requires less people, more automated and uses less factory space.
"Our headcounts (reduced) from 10,000 to slightly above 7,000 and we've been able to open up 20% to 25% of our factory space, yet at the same time (is) able to bring in the same equivalent amount of revenue," he added.
The group has three plants located in Ipoh, Chengdu and Batam.
Meanwhile, Unisem, which has a net debt of RM150 million, aims to be debt-free by the year-end.
"We think our ebitda will be in excess of RM300 million this year, if we take away RM100 million for capex, we'll have RM200 million left for reduction of debt and dividend," said Chia.
He added that the group could enhance its dividend payout when it is free of debt. In FY14, Unisem paid a dividend of 6 sen per share.
Unisem's net profit for the first quarter ended March 31, 2015 surged 154% to RM23.54 million against RM9.27 million in the previous corresponding period.
In FY14, it reported a net profit of RM67.75 million compared with a net loss of RM109.29 million in FY13.
Unisem's share price was down 2 sen or 0.82% to RM2.43 yesterday.