Malaysia tech firms seen cutting revenue forecasts
KUALA LUMPUR, March 15 (Reuters) - Malaysian semiconductor firms may have to lop more off their revenue forecasts after a recent spate of profit warnings from top international high-tech powerhouses, analysts told Reuters on Thursday.
They said prospects of local chipmakers Malaysian Pacific Industries Bhd (MPIM.KL) and Unisem (UNSM.KL) will have to be reviewed given the sickly conditions dogging the sector globally.
``Clearly we are seeing the impact of slowdown in the electronics market,'' said David Cohen, regional economist at Standard & Poor's MMS.
``The question is where we go from here, whether it will bottom out or get worse. The picture is still very unclear.''
Rudie Chan, an analyst with Ing Barings agreed, but added hopes of a recovery later in the year can be forgotten.
``Earlier in the year, people were looking at recovery in the second half but that's not likely to happen,'' Chan said .
Among giants that warned of lower profits, blaming slowing customer orders, were electronic equipment maker Micrel (MCRL.O), semiconductor supply maker Cabot Microelectronics (CCMP.O), cellular phone makers Motorola Inc (MOT.N) and Ericsson (ERICY.O).
``The indications are not good across all the sectors (of demand for chips) from personal computers to telecommunications and wireless,'' Chan said.
Last month, MPI said sales may fall by 20 percent in the first three months of the year and Unisem by 15 percent.
``Malaysian chipmakers are mainly contract manufacturers and if their clients feel the pinch they will too,'' said C.K. Ngu, research head at TA Securities, who predicts additional cuts of five to 10 percent for both firms.
Unisem reported a 147 million ringgit net profit on a turnover of 404 milion ringgit in the 12 months to December 31. Multex Global Estimates shows a consensus net profit estimate for 2001 of 134.6 million ringgit.
And MPI posted a 327 million ringgit net profit on a 1.53 billion turnover for the full-year. Multex Global Estimates has a consensus net profit estimate for 2001 of 366.4 million ringgit.
Officials of both MPI and Unisem could not be reached for immediate comment.
Exports of electronics, the main engine of Malaysian economic growth, accounting for 60 percent of total exports, dropped 10 percent in January, reflecting weak demand from the country's largest market, the United States.
VALUATIONS STILL HIGH
Share prices of both MPI and Unisem have both reaped the gobal whirlwind that swept IT stocks up, only to drop from a great height.
After trading within a five to seven ringgit band in the first half of 1999, both stocks rocketed more than 600 percent to highs in February of 57 ringgit for MPI, and 44 for Unisem.
At midday Thursday, MPI was down 10 cents at 15.30 ringgit while Unisem lost 20 cents to 7.40.
Analysts say there may be more downside for both the stocks as investors, scared off by uncertainty in the sector, bail out.
``Both MPI and Unisem are trading at multiples of 12 to 13 times earnings and this can rise to 15 or 16 times, depending on the profit they finally bring in,'' said Ing's Chan.
But European fund manager, Fortis Investment Management (FOR.BR) takes a more optimistic view.
It said investors, keen on getting back into technology stocks, should start putting money in Asia where equity markets will recover faster than in the U.S.
But Fortis remains underweight in Malaysia, partly on concern that the ringgit's peg at 3.8 per dollar, fixed in late 1998, could need adjusting. |
