The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Shares of Unisem (M) Bhd extended their decline to the lowest in nearly three months following weaker-than-expected second quarter results.
Stock Performance:
- Share Price: Unisem fell by as much as 4%, or 16 sen, to RM3.83, the lowest since May 14, 2024.
- Market Capitalisation: At 9.25 am, the stock was trading at RM3.84, giving the company a market capitalisation of RM6.19 billion.
- Trading Volume: The trading volume totaled 149,800 shares.
Analyst Reactions:
- RHB Research and CGS International: Both noted that Unisem's core earnings were below expectations, affected by lower margins from the product mix and additional operational costs.
- RHB Research: Despite the earnings miss, RHB maintains a 'buy' rating with a higher target price of RM4.40, citing cautious optimism from Unisem's management about higher loadings in the second half of 2024 (2H2024).
- CGS International: Maintained a 'reduce' call with an unchanged target price of RM2.00, highlighting Unisem’s 41% year-on-year decline in core net profit due to rising staff costs.
Operational Outlook:
- Unisem’s Management: Anticipates a strong ramp-up in its Chengdu operations in 2H2024, driven by key projects such as MEMs microphone modules for mobile devices and power module applications for the China market.
- Utilisation Rate: Near full capacity for flip-chip bonding, with preparations for capacity ramp-up at phase 3 Chengdu operations.
- Ipoh Operations: Production outlook remains subdued due to soft legacy radio frequency businesses for smartphones and new projects expected to ramp up by FY2025.
- Gopeng Plant: Started new pilot projects and aims to consolidate Malaysian operations in the longer term, also housing backend production lines as part of the China Plus One strategy.
Analyst Commentary:
- RHB Research: Believes in a recovery with quarter-on-quarter improvement and stronger loadings ahead, consistent with the overall sector trajectory. Recommends positioning to ride on the new semiconductor cycle.
- CGS International: Notes the strategic co-investment in testing equipment with key customers and the preparation for a production ramp-up, but remains cautious on the immediate outlook.
Unisem’s strategic efforts to ramp up production and adapt to market demands signal a potential recovery, but the immediate challenges and earnings miss reflect ongoing operational hurdles.
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