US-China trade intensity to benefit UWC Bhd, says HLIB
08 Sep 2021
The ongoing trade intensity may benefit UWC Bhd as more companies are shifting their productions out of China to avoid import tariffs, according to Hong Leong Investment Bank Bhd (HLIB Research).
Analyst Tan J Young said the semiconductor test equipment maker provides a one-stop solution and continues to receive orders from semiconductor, life science and 5G test equipment customers.
“There was no order cancellation when output was restricted,” he said in a research note today.
Tan said UWC’s newly-leased Taiping factory had commenced operation in August with 49 new staff.
“It currently develops other medical equipment to test the mutated Covid-19 strains with clients,” he said.
As of September 1 2021, UWC’s order book stood at over RM100 million, comprising semiconductors at 79 per cent, life science/medical at 18 per cent and others at about 3 per cent.
It added that 80 per cent of UWC’s employees had received two doses of vaccination and were allowed to operate at full capacity since August.
HLIB Research has reiterated a Buy call for UWC with a lower target price of RM6.75, pegged to unchanged 50 times of financial year (FY) of 2023 earnings per share.
“As a result, FY22-FY23 earnings are revised downward by 7.0 per cent and 17 per cent, respectively.”