KUALA LUMPUR (Nov 4): RHB Research Institute is maintaining its underperform ratings on Unisem and MALAYSIAN PACIFIC INDUSTRIES [] (MPI) at 92 sen and RM2.19 respectively.
It said on Friday with the poor earnings visibility on the back of weak guidance by major players in the industry, the outlook for 2012 remains in doubt amidst the bearish outlook in the global economy.
“Furthermore, post Unisem’s analyst briefing recently, there was lack of conviction as to whether the guided 4Q2011 revenue decline would be short-term, with a quick a recovery in 2012, although management appeared optimistic on such a scenario,” it said.
RHB Research said the largest fab player, Taiwan Semiconductor Manufacturing Company (TSMC) expects overall industry growth of only 1% (from 2%) for 2012, following the weaker-than-expected performance in 3QFY11. On the other hand, market research groups expect growth of 5-7%.
“Therefore, given the contrasting views for 2012, we believe medium-term forecasts beyond 4Q2011 are unreliable at this time,” it said.
RHB Research said due to the lack of earnings visibility, it believed that PER-based valuation methodology is no longer reliable.
“Thus, we have shifted to an asset-based valuation methodology as this may provide a better indication of price support levels. We have used 0.6x BV as a benchmark.
“This is mainly based on Unisem’s 5-year historical data which suggests that the bottom is around 1 standard deviation below the mean. We have also applied this to MPI as recent data indicates that the stock has fallen to unprecedented lows in terms of P/BV,” it said.
It said on Friday with the poor earnings visibility on the back of weak guidance by major players in the industry, the outlook for 2012 remains in doubt amidst the bearish outlook in the global economy.
“Furthermore, post Unisem’s analyst briefing recently, there was lack of conviction as to whether the guided 4Q2011 revenue decline would be short-term, with a quick a recovery in 2012, although management appeared optimistic on such a scenario,” it said.
RHB Research said the largest fab player, Taiwan Semiconductor Manufacturing Company (TSMC) expects overall industry growth of only 1% (from 2%) for 2012, following the weaker-than-expected performance in 3QFY11. On the other hand, market research groups expect growth of 5-7%.
“Therefore, given the contrasting views for 2012, we believe medium-term forecasts beyond 4Q2011 are unreliable at this time,” it said.
RHB Research said due to the lack of earnings visibility, it believed that PER-based valuation methodology is no longer reliable.
“Thus, we have shifted to an asset-based valuation methodology as this may provide a better indication of price support levels. We have used 0.6x BV as a benchmark.
“This is mainly based on Unisem’s 5-year historical data which suggests that the bottom is around 1 standard deviation below the mean. We have also applied this to MPI as recent data indicates that the stock has fallen to unprecedented lows in terms of P/BV,” it said.
