• Some glimmers of hope… Rays of hope are permeating the semiconductor industry, which probably saw most of the bad news in 1QCY09. Global chip sales improved slightly in Mar 09 with a 30.0% yoy decline compared with a 30.1% yoy fall in Feb 09. The book-to-bill ratio has ticked up with preliminary Mar 09 numbers hitting 0.61x, up from Feb 09’s abysmal 0.47x. Finally, utilisation rates have scraped bottom as some production facilities have been shuttered and inventory control is being exercised. The end-user markets appear to have troughed, with PC and handset sales probably hitting the bottom. Furthermore, trade credit is now normalising. That said, stabilisation does not equate to a recovery and we believe that restocking activity as inventory runs low is the primary factor in the improving outlook. We still expect 2009 to be a difficult year where the typical seasonal pick up in 3Q may not materialise given the current re-stocking activities. • …but no full-blown recovery until 2010. We argue that a true recovery will only take root when the global economy begins to move upwards. A meaningful and sustained recovery will only take place when consumer sentiment and spending spring back to life and cause ASPs to start rising. We believe that a more convincing uptrend will take hold only from 2H10 onwards. • Global economies to start stabilising towards year-end. Our economists believe that the world economy will feel the full impact of the global financial crisis this year. Although the process of sorting out the financial system will take time and resources, the cumulative effects of sizeable fiscal stimuli and aggressive monetary easing globally will work to provide some stability. Recent global indicators are less negative. Considering the extremely low base this year, global growth should pick up in 2010 but will probably fall short of its long-run average growth rate of 3.7%. • Upgrade sector to TRADING BUY. While the fundamentals for the sector remain uncertain, we think that downside to share prices is limited as valuations are still below trough levels. We upgrade the sector from Underperform to TRADING BUY. Furthermore, in line with our market strategy, we think that investors’ risk appetite is increasing and higher beta plays such as semicon should be in vogue. Investors should start picking up semicon stocks ahead of the recovery of the sector as historically, the share prices for both MPI and Unisem cratered 13-18 months before the upturn of the sector. Sector catalysts include a) a sooner-than-expected revival of end-user demand and b) a faster-than-expected economic recovery. • Upgrade Unisem and MPI to Trading Buy. In tandem with the sector upgrade, we upgrade MPI and Unisem from Underperform to Trading Buy. We raise our target prices for both after cutting our discounts to their 5-year historical average by 30- 60% pts to 20-40% for Unisem and MPI respectively. We assign a lower discount to Unisem, our top pick, as its higher liquidity and beta make it a better play on a market rebound. Re-rating catalysts include a) qoq improvement in earnings, b) revival of end demand and c) the higher betas on offer.

1. SECTOR UPDATE
7 May 2009
MALAYSIA
CIMB Research Report
Upgraded
TRADING BUY
Semiconductor
Time to reboot?
Terence Wong CFA +60(3) 20849689 - terence.wong@cimb.com
• Some glimmers of hope… Rays of hope are permeating the semiconductor
industry, which probably saw most of the bad news in 1QCY09. Global chip sales
improved slightly in Mar 09 with a 30.0% yoy decline compared with a 30.1% yoy
fall in Feb 09. The book-to-bill ratio has ticked up with preliminary Mar 09 numbers
hitting 0.61x, up from Feb 09’s abysmal 0.47x. Finally, utilisation rates have scraped
bottom as some production facilities have been shuttered and inventory control is
being exercised. The end-user markets appear to have troughed, with PC and
handset sales probably hitting the bottom. Furthermore, trade credit is now
normalising. That said, stabilisation does not equate to a recovery and we believe
that restocking activity as inventory runs low is the primary factor in the improving
outlook. We still expect 2009 to be a difficult year where the typical seasonal pick up
in 3Q may not materialise given the current re-stocking activities.
• …but no full-blown recovery until 2010. We argue that a true recovery will only
take root when the global economy begins to move upwards. A meaningful and
sustained recovery will only take place when consumer sentiment and spending
spring back to life and cause ASPs to start rising. We believe that a more
convincing uptrend will take hold only from 2H10 onwards.
• Global economies to start stabilising towards year-end. Our economists believe
that the world economy will feel the full impact of the global financial crisis this year.
Although the process of sorting out the financial system will take time and
resources, the cumulative effects of sizeable fiscal stimuli and aggressive monetary
easing globally will work to provide some stability. Recent global indicators are less
negative. Considering the extremely low base this year, global growth should pick
up in 2010 but will probably fall short of its long-run average growth rate of 3.7%.
• Upgrade sector to TRADING BUY. While the fundamentals for the sector remain
uncertain, we think that downside to share prices is limited as valuations are still
below trough levels. We upgrade the sector from Underperform to TRADING BUY.
Furthermore, in line with our market strategy, we think that investors’ risk appetite is
increasing and higher beta plays such as semicon should be in vogue. Investors
should start picking up semicon stocks ahead of the recovery of the sector as
historically, the share prices for both MPI and Unisem cratered 13-18 months before
the upturn of the sector. Sector catalysts include a) a sooner-than-expected revival
of end-user demand and b) a faster-than-expected economic recovery.
• Upgrade Unisem and MPI to Trading Buy. In tandem with the sector upgrade, we
upgrade MPI and Unisem from Underperform to Trading Buy. We raise our target
prices for both after cutting our discounts to their 5-year historical average by 30-
60% pts to 20-40% for Unisem and MPI respectively. We assign a lower discount to
Unisem, our top pick, as its higher liquidity and beta make it a better play on a
market rebound. Re-rating catalysts include a) qoq improvement in earnings, b)
revival of end demand and c) the higher betas on offer.
Sector comparisons
Core ROE
Target 3-yr EPS P/BV Div
P/E (x) (x) yield (%)
Bloomberg Price price Mkt cap CAGR (%)
(Local) (Local) (US$ m) (%)
ticker Recom. CY2009 CY2010 CY2009 CY2009 CY2009
Unisem UNI MK TB 1.20 1.70 160 80.1 23.3 (7.5) 0.7 0.8 2.8
7.40
MPI MPI MK TB 5.50 326 147.3 33.1 (31.2) 1.5 1.0 3.1
Chartered Semicon CSM SP U 0.21 0.14 1,311 nm nm 161.7 0.9 (17.4) 0.0
Simple average 111.9 27.7 41.0 1.0 (5.2) 2.0
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy and TS = Trading Sell
Source: Company, CIMB Research
For further information, kindly contact Simeon Masuda Koh at 603-2084 9807 or simeon.koh@cimb.com
Please read carefully the important disclosures at the end of this publication.

2. Some glimmers of hope…
2009 is shaping up to be an extremely difficult year for chipmakers as they have to
fight their way through a tangled web of diminishing economic growth and weak end-
user demand. Many market researchers are forecasting 2009 to be an exceedingly
poor year:
• In a somewhat dated projection made in Nov 08, Semiconductor Industry
Association (SIA) forecast a 5.6% decline in 2009 global chip sales due to the
current economic global turmoil.
• Databeans, a market research outfit, is pessimistic about the outlook for this year,
predicting that sales will fall by ~20% in 2009 to just over US$200bn (the market
size nine years ago), exacerbated by temporary macroeconomic issues that have
impacted consumer spending on devices that use integrated circuits (IC).
• Gartner, on the other hand, expects semiconductor sales to tumble 24% from the
2008 level due to the impact of the financial crisis.
• IDC, meanwhile, expects a revenue decline of 22% for 2009 due to macroeconomic
uncertainty, double-digit declines in unit shipments, low utilisation rates and price
erosion.
• IC Insights projects a 16% decline in 2009 chip sales.
Glimmers of hope? However, some glimmers of hope are beginning to break
through. The following factors and the normalising of trade credit suggest that
1QCY09 may represent the bottom of the cycle:
• Worldwide chip sales – Global chip sales showed a slight improvement in Mar 09
when sales fell 30.0% yoy vs. a 30.1% drop in Feb 09. 1Q sales dropped by 29.6%
yoy but a lesser 27.3% on a qoq basis. Apart from Japan, sales in all geographic
regions showed mom gains. According to the SIA, the modest sequential rebound in
Mar sales suggests that demand has stabilised somewhat, albeit at substantially
lower levels than last year. While all major product sectors showed mom growth,
there is still limited visibility in end markets.
Figure 1: Monthly sales (US$ bn) vs. yoy growth (%)
US$ bn Monthly Sales %
25 y oy change (%) 60.0%
40.0%
20
20.0%
15
0.0%
10
-20.0%
5 -40.0%
0 -60.0%
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: SIA, Worldwide Semiconductor Trade Statistics, CIMB Research
Figure 2: Chip sales by geography yoy comparison (%)
Americas Europe Japan Asia Pac Total
60.0%
40.0%
20.0%
0.0%
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
-20.0%
-40.0%
-60.0%
Source: SIA, WSTS, CIMB Research
[2]

3. • Book-to-bill ratio – After hitting near historical lows in Jan/Feb 09, the book-to-bill
ratio ticked upwards with preliminary numbers for Mar 09 touching 0.61x. SEMI
noted that the sharp declines in bookings have abated although the improvement in
Mar is due to the easing of billings. It pointed out that semiconductor equipment
bookings remain at levels below that needed to support a healthy supply chain. In
fact, bookings have compressed at an alarmingly rapid clip, shedding some 76%
since the beginning of 2008.
• Utilisation rates have sat idle – As end-user demand dried up and as greater
inventory control is exercised, utilisation rates began to fall precipitously, hitting
69.3% in 4Q, a level last seen during the dotcom bust. We think that downside to
these rates is limited, especially once the semiconductor industry starts to witness a
pick-up in production activity.
Figure 3: Book-to-bill ratio (x)
1.60
1.40
1.20
1.00
0.80
0.60
Near historic low s
0.40
0.20
0.00
99
00
01
02
03
04
05
06
07
08
09
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Source: SEMI
Figure 4: Bookings vs. billings (US$ m)
$3,500 Bookings Billings
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: SEMI
Figure 5: Utilisation rates (%)
100.0
95.0
90.0
85.0
80.0
75.0
70.0
65.0
60.0
1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08
Source: SICAS
• Foundries are seeing some rush orders – The Taiwan Semiconductor
Manufacturing Company (TSMC) experienced its worst sequential decline ever with
[3]

4. sales dropping 39% in 1Q. However, 2Q is seeing a strong rebound with projections
of a 80-88% qoq surge aided in part by rush orders from the Chinese market which
is seeing strong pickup and some re-stocking. Meanwhile, United Microelectronics
Corp (UMC) is expecting a significant improvement in revenue in 2Q from the heavy
42% qoq decline in 1Q. It is seeing some rush orders from China.
• End-user markets could have bottomed out – According to Gartner, worldwide PC
shipments totalled 67.2m in 1Q09, declining 6.5% on a yoy basis. However, Gartner
has been seeing some evidence of channel inventory restocking, particularly in the
US. This should not be interpreted as a recovery in PC end user demand as it is
unclear if the global PC market has hit the bottom. Intel, however, has issued a
more bullish assessment calling for a bottom for PC sales in 1Q09 and that the
industry is returning to normal seasonal patterns. On the mobile phone front, Nokia
contends that while industry conditions will remain challenging, it appears that the
vast majority of the channel inventory de-stocking appears to be behind it. While this
will lead to lower industry volatility compared to the past two quarters, it is still too
early to call a bottom in the market. That said, although the trajectory of the end-
user market remains unclear, the end market is no longer falling in an uncontrolled
manner. Meanwhile, Apple defied the macroeconomic environment, shipping total
orders that exceeded the market’s expectations.
• ASPs may start to rise – According to IC Insights, industry conditions are starting to
suggest that ASPs will begin to improve dramatically in the coming months. This is
due to low inventory levels. Any uptick in orders would conspire to drive prices
upwards.
2009 will be a difficult year. The improving picture reflects more of an inventory re-
stocking situation rather than a true fundamental return to demand. We think that the
operating environment for 2009 will remain difficult where the typical seasonal pick up
in 3Q may not materialise given the current re-stocking activities. But we caution that
visibility is extremely poor at this stage with limited insights beyond 2Q. Many
operators are still cautious on capex spending.
In a recent interview, the MD of Unisem stated that demand in Mar had outpaced both
Jan and Feb combined and that capacity utilisation rates had ticked up to 50%
currently from 40% in Jan. While he is expecting a better 2Q than 1Q, he is still
cautious. The outlook for 2009 is unclear as it is dependent on what happens in 2H09.
Figure 6: Worldwide PC sales (m)
Company 1Q09 1Q09 1Q08 1Q08 1Q09-1Q08
Shipments Market Share Shipments Market Share Growth
(m) (%) (m) (%) (%)
HP 13.3 19.8 13.0 18.1 2.5
Dell 8.8 13.1 10.6 14.7 -16.9
Acer 8.8 13.0 6.9 9.6 26.7
Lenov o 4.4 6.6 4.8 6.7 -7.7
Toshiba 3.7 5.5 3.1 4.3 18.4
Others 28.2 42.0 33.5 46.6 -15.6
Total 67.2 99.9 71.8 100.0 -6.5
Source: Gartner
Figure 7: Worldwide handset sales (m)
Company 4Q08 4Q08 4Q07 4Q07 2008-2007
Sales Market Share Sales Market Share Growth (%)
(m ) (%) (m) (%)
Nokia 118.8 37.7 133.2 40.4 -10.8
Samsung 57.5 18.3 44.4 13.4 29.7
LG 28.1 8.9 23.5 7.1 19.5
Sony Ericsson 23.6 7.5 29.8 9.0 -21.1
Motorola 21.7 6.9 39.3 11.9 -44.8
Others 65.0 20.7 59.8 18.1 8.7
Total 314.7 100 330.1 100 -4.7
Source: Gartner
[4]

5. …but no great upturn likely until 2010
The key is demand revival and higher ASPs. End-user demand, which is key to the
downcycle this time, remains extremely foggy with limited visibility beyond 2Q. At this
juncture, consumer spending remains at relatively low levels, retail sales in the US are
still weak and the inventory/shipment ratio of electronic and consumer goods is on the
rise, although the worst is probably over. While private consumption in the US
rebounded by 2.2% in 1Q09, our economics team thinks that growth of consumer
spending will remain moderate as households repair their balance sheets and rebuild
their savings.
Therefore, we believe a real revival of the sector will probably unfold in 2H10 as the
economy starts to improve gradually and consumer and corporate spending make a
comeback. This will provide a boost to fairly low ASPs which will, in turn, spur capital
investments, lift utilisation rates and lead to more output and outsourcing to the back-
end test and packaging players. Finally, the various stimulus packages will take some
time to work their way through the system and provide a fillip to consumer/corporate
demand.
A more pronounced recovery in 2010. Most market researchers are expecting a
sharp V-shaped rebound in 2010, partly due to the exceedingly low base in 2009.
• SIA has projected 2010 worldwide sales to push upwards by 7.4%.
• Databeans is the most optimistic market research house, forecasting that 2010
worldwide sales will rebound sharply to exceed 2007’s levels. It expects a
boomerang recovery in 2010, with worldwide sales increasing by 17%. It even went
so far to predict that by 2011, sales will regain momentum and surpass the peak
seen during 2007.
• Gartner, on the other hand expects a fairly decent revitalisation trend in 2010,
predicting growth of 7.5% then.
• IC Insights expects a rather sharp acceleration in chip sales for 2010. Based on
previous trends, chip sales have generally seen very strong growth in the order of
20% in the year after recession, followed by a 30-40% upturn in the subsequent
year. If this holds true, then the industry is poised for strong growth in 2010-2011.
• Finally, IDC does not expect yoy growth in revenues until 2Q10 although it expects
a positive growth rate (quantum not disclosed) in 2010.
Figure 8: Consumption spending declines at slower pace Figure 9: Improving consumer confidence
Consumer Confidence Index
Personal spending Retail sales Index
% mom
100
3
2 80
1
60
0
-1 40
-2
20
-3
0
-4
Jan-07 Jun-07 Nov -07 Apr-08 Sep-08 Feb-09
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09
Source: Bloomberg
[5]

6. Figure 10: US inventory to shipment ratio (x) of electronic products rising sharply – a bearish sign
2.20
2.00
1.80
1.60
1.40
1.20
1.00
Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08
Source: CEIC, CIMB Research
Global economy to stabilise by end 09
Stabilisation by end-09. Our economics team believes that the global economy will
stabilise towards year-end although it will feel the full impact of the fallout from the
global financial crisis this year, which will drive global growth into the deepest decline
in decades. Major developed economies have suffered significant contractions despite
attempts to limit the downturn through major fiscal stimulus packages, substantial
interest rate cuts and, in the case of the US, UK and Japan, quantitative easing. In
fact, the IMF recently revised its global economic outlook for the fourth time, noting the
severe recession. It projects world output to decline 1.3% in 2009 in the deepest
recession since the Great Depression. Growth is expected to recover gradually in
2010, increasing by 1.9% as a result of efforts to heal the financial sector as well as
monetary and fiscal easing to support demand.
But some abatement in bad news. Our economics team recently noted that the
sharp decline in economic activity seems to have abated somewhat compared to
previous months. This stems from several indicators including i) reduced risk aversion,
ii) some tentative signs of stabilisation in the US, iii) China’s fiscal stimulus hitting
home, and iv) regional exports bottoming out.
Figure 11: Global GDP growth estimate
2007 1Q08 2Q08 3Q08 4Q08 2008 2009F 2010F
US 2.0 0.9 2.8 -0.5 -6.3 -6.1 -2.0 to -3.0 1.0
EU 2.6 2.1 1.4 0.6 -1.3 0.8 -3.0 0.5
Japan 2.4 1.5 0.7 -0.2 -4.3 -0.6 -3.0 0.8
UK 3.0 2.6 1.8 0.4 -2.0 0.7 -2.8 0.2
Source: Bloomberg, CEIC
What will turn the global situation around? Global policy continues to fire on all
cylinders, with the public sector balance sheet (the federal government and central
banks) being used to cushion the private sector’s deleveraging process. The Fed’s
latest bold actions of adopting quantitative easing and removing toxic assets from
banks’ balance sheets should over time help to restore the health of the banking
sector and ensure the resumption of credit flows to the private sector. The significantly
lower interest rates and fiscal stimulus which will take 6-9 months to work its way
through the system will undoubtedly help to stabilise economic activity later this year.
Global growth should be stronger in 2010 than in 2009, aided by the extremely low
base. Nevertheless, the growth trajectory will probably fall short of its long-run
average of 3.7%. We think major developed economies will not return to above-trend
growth for another 2-3 years.
[6]

7. Figure 12: The global economy will take several years before it grows above trend again
% Global grow th Forecast Long-term trendline
8
6
L-T av g
4
3.7%
2
0
-2
2009E
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2010F
Source: International Monetary Fund (IMF), CIMB/CIMB-GK Research
Figure 13: Major economies roll out large fiscal packages
China 13.3
5.6
US
Japan 2.0
EU-27 1.5
UK 1.4
% of GDP
0 2 4 6 8 10 12 14
Source: National sources, OECD, CIMB/CIMB-GK Research
Figure 14: Major central banks have slashed interest rates to historical lows
As at 9 Apr 09 As at end-Sep 08
% p.a.
6
-450bp since Sep 08
5
-300bp since Sep 08
4
3
-175bp since Sep 08
2
-40bp since Sep 08
1
0.25 0.10 1.25 0.50
0
US Fed fund rate Japan target rate ECB benchmark rate BoE bank rate
Source: National sources, CIMB/CIMB-GK Research
Valuation and recommendation
Upgrade to TRADING BUY. While the fundamental outlook remains rather ugly with
little improvement expected throughout 2009, we believe that the downside risk to
share prices is limited. Valuation-wise, both Unisem and MPI are still trading below
their trough valuations (Figures 18 and 19) during the dotcom bust and the past five
years. In line with our upgrade of the broader market and a shift to higher-beta cyclical
plays in this cycle, we are upgrading the sector to TRADING BUY from Underperform.
Re-rating catalysts for the sector include a) faster-than-expected revival of end-
demand and b) a quicker-than-expected economic recovery. In fact, tech stocks in the
US and Taiwan have rallied in recent weeks as many believe that the worst has
passed and that a recovery could be on the cards.
Near the bottom? Following the weak share price performance, both MPI and
Unisem are now trading below even the trough P/BVs seen during the 2001 dotcom
[7]

8. bust. We think that much of the bad news has already been priced in. In fact, using
the broader KL Technology Index as a gauge, we see that it has been on a downward
momentum, losing 39% since the beginning of 2008 and an even more astounding
77% since the last peak back in Oct 2003.
Share prices react before the recovery. As noted in our previous report in Oct 08,
both Unisem and MPI saw their share prices cratering some 13-18 months prior to the
recovery in the sector. Share prices then rebounded, hitting their peak five months
prior to the end of the dot-com crash, implying an 8-10 month window for profit-taking.
While we earlier advocated a re-entry sometime in June 2009, we have turned slightly
more bullish in line with our market strategy. We now think that an earlier timeframe
would be more appropriate.
Figure 15: KL Technology Index
150
125
100
75
50
25
0
May -00 May -01 May -02 May -03 May -04 May -05 May -06 May -07 May -08
Source: Bloomberg
Figure 16: Unisem’s price performance during dotcom crash
RM
15
Dot-com crash
13 Peak after price
11 cratered
9
Low during crash
7
5
3
1
Jan-00 May -00 Sep-00 Jan-01 May -01 Sep-01 Jan-02 May -02 Sep-02
Source: Bloomberg, CIMB Research
Figure 17: MPI’s price performance during dotcom crash
RM
55
Dot-com crash Peak after
48
price cratered
41 Low during crash
34
27
20
13
6
Jan-00 May -00 Sep-00 Jan-01 May -01 Sep-01 Jan-02 May -02 Sep-02
Source: Bloomberg, CIMB Research
Upgrade both Unisem and MPI. We are upgrading both Unisem and MPI from
Underperform to Trading Buy as we think that the downside to share prices is limited
as both are trading below trough valuations. For Unisem, business conditions appear
to be improving with stronger demand and higher utilisation rates seen. Also, its MD
expects a better 2Q than 1Q. However, we should not read too much into this for the
[8]

9. full year as it is coming from a low base effect and visibility remains poor. We have,
therefore, reduced our discount to its 5-year historical P/BV average from 80% to
20%. This lifts our target price from RM0.53 to RM1.70. The upside catalysts for
Unisem include a) a qoq improvement in earnings, b) revival of end-demand and c) its
higher beta. We attach a lower discount to Unisem vs MPI as its higher liquidity and
beta make it a better play on a market rebound.
Similarly, we think that MPI will report poor 1Q results but expect conditions to
stabilise after. We raise our price objective for MPI from RM3.30 to RM7.40 after
scaling back our discount to its 5-year adjusted historical P/BV from 70% to 40%. The
re-rating catalysts for MPI include a) a qoq improvement in earnings, b) revival of end-
demand and c) increasing risk tolerance. Our preference lies with Unisem over MPI
primarily for its higher beta.
Figure 18: Unisem’s historical P/BV (x)
12
10
8
6
4
2
0
Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08
Source: Bloomberg, CIMB Research
Figure 19: MPI’s unadjusted historical P/BV (x)
15
12
9
6
3
0
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Source: Bloomberg, CIMB Research
[9]

10. COMPANY BRIEFS…
[ 10 ]

11. QUICK TAKES
7 May 2009
MALAYSIA
CIMB Research Report Syariah-compliant stock
TRADING BUY Upgraded
Unisem (M) Berhad RM1.20 Target: RM1.70
Time to reboot? Mkt.Cap: RM566m/US$160m
Semiconductor
UNI MK / UNSM.KL Terence Wong CFA +60(3) 20849689 – terence.wong@cimb.com
Some glimmers of hope
Some glimmers of hope…Rays of hope are permeating the semiconductor industry,
which probably saw most of the bad news in 1QCY09. Global chip sales improved
slightly in Mar 09 with a 29.9% yoy decline compared with a 30.4% yoy fall in Feb 09.
The book-to-bill ratio has ticked up with preliminary Mar 09 numbers hitting 0.61x, up
from Feb 09’s abysmal 0.47x. Finally, utilisation rates have scraped bottom as some
production facilities have been shuttered and inventory control is being exercised. The
end-user markets appear to have troughed, with PC and handset sales probably
hitting the bottom. Furthermore, trade credit is now normalising. That said, stabilisation
does not equate to a recovery and we believe that restocking activity as inventory runs
low is the primary factor in the improving outlook We still expect 2009 to be a difficult
year where the typical seasonal pick up in 3Q may not materialise given the current
re-stocking activities.
…but no full-blown recovery until 2010. We argue that a true recovery will only take
root when the global economy begins to move upwards. A meaningful and sustained
recovery will only take place when consumer sentiment and spending spring back to
life and ASPs start rising. We believe that a more convincing uptrend will take hold
only from 2H10 onwards.
Upgrade sector to TRADING BUY. While the fundamentals for the sector remain
uncertain, we think that downside to share prices is limited as valuations are still below
trough levels. We upgrade the sector from Underperform to TRADING BUY.
Furthermore, in line with our market strategy, we think that investors’ risk appetite is
increasing and higher beta plays such as semicon should be in vogue. Investors
should start picking up semicon stocks ahead of the recovery of the sector as
historically, the share prices for both MPI and Unisem cratered 13-18 months before
the upturn of the sector. Sector catalysts include a) a sooner-than-expected revival of
end-user demand and b) a faster-than-expected economic recovery.
Valuation and recommendation
Upgrade to TRADING BUY with higher target price. We retain our earnings
forecasts but upgrade Unisem to TRADING BUY from Neutral as we believe that the
downside to its share price is limited given that the stock is trading below trough
valuations. Business conditions appear to be improving, with stronger demand and
higher utilisation rates in evidence. Also, Unisem’s MD expects a better 2Q than 1Q.
However, we should not read too much into this for the full year as it is coming from a
low base and visibility remains poor. We have, therefore, reduced our discount to its 5-
year historical P/BV average from 80% to 20%. This lifts our target price from RM0.53
to RM1.70. We assign a lower discount to Unisem vs MPI as its higher liquidity and
beta make it a better play on a market rebound. The re-rating catalysts for Unisem
include a) a qoq improvement in earnings, b) revival of end-demand and c) its high
beta of 1.3x.
For further information, kindly contact Simeon Masuda Koh at 603-2084 9807 or simeon.koh@cimb.com
[ 11 ]

12. Financial summary
FYE Dec 2007 2008 2009F 2010F 2011F
Revenue (RM m) 972.5 1,233.4 825.4 954.1 1,025.9
EBITDA (RM m) 227.2 235.7 151.0 193.3 218.5
EBITDA margins (%) 23.4% 19.1% 18.3% 20.3% 21.3%
Pretax profit (RM m) 117.7 24.0 8.3 29.1 51.1
Net profit (RM m) 119.1 19.8 7.1 24.3 42.9
EPS (sen) 25.3 4.2 1.5 5.2 9.1
EPS growth (%) 44.2% (83.4%) (64.3%) 243.8% 76.7%
P/E (x) 4.8 28.6 80.1 23.3 13.2
Core EPS (sen) 14.1 11.5 1.5 5.2 9.1
Core EPS growth (%) (19.8%) (18.2%) (87.0%) 243.8% 76.7%
Core P/E (x) 8.5 10.4 80.1 23.3 13.2
Gross DPS (sen) 13.7 3.4 3.4 3.9 4.5
Price chart
Dividend yield (%) 11.4% 2.8% 2.8% 3.2% 3.8%
1.6
P/BV (x) 0.7 0.7 0.7 0.7 0.7
9.00
8.00
1.4
ROE (%) 16.3% 2.4% 0.8% 2.9% 5.1%
7.00
1.2
6.00
Net gearing (%) 56.5% 54.9% 43.2% 38.1% 30.0%
5.00
1.0
4.00
P/FCFE (x) (17.0) (112.2) 12.6 9.7 6.7
0.8 3.00
2.00
EV/EBITDA (x) 4.6 4.4 6.2 4.7 3.8
0.6
1.00
% change in EPS estimates - - -
0.00
0.4
May-08 Oct-08 Mar-09
CIMB/Consensus (x) (14.99) 0.68 1.00
Volume 1m (R.H.Scale) Unisem (M) Berhad
Source: Bloomberg Source: Company, CIMB Research, Bloomberg
[ 12 ]

13. QUICK TAKES
7 May 2009
MALAYSIA
CIMB Research Report Syariah-compliant stock
TRADING BUY Upgraded
Malaysian Pacific Industries Bhd RM1.20 Target: RM1.70
Time to reboot? Mkt.Cap: RM566m/US$160m
Semiconductor
UNI MK / UNSM.KL Terence Wong CFA +60(3) 20849689 – terence.wong@cimb.com
Some glimmers of hope
Some glimmers of hope…Rays of hope are permeating the semiconductor industry,
which probably saw most of the bad news in 1QCY09. Global chip sales improved
slightly in Mar 09 with a 29.9% yoy decline compared with a 30.4% yoy fall in Feb 09.
The book-to-bill ratio has ticked up with preliminary Mar 09 numbers hitting 0.61x, up
from Feb 09’s abysmal 0.47x. Finally, utilisation rates have scraped bottom as some
production facilities have been shuttered and inventory control is being exercised. The
end-user markets appear to have troughed, with PC and handset sales probably
hitting the bottom. Furthermore, trade credit is now normalising. That said, stabilisation
does not equate to a recovery and we believe that restocking activity as inventory runs
low is the primary factor in the improving outlook. We still expect 2009 to be a difficult
year where the typical seasonal pick up in 3Q may not materialise given the current
re-stocking activities.
…but no full-blown recovery until 2010. We argue that a true recovery will only take
root when the global economy begins to move upwards. A meaningful and sustained
recovery will only take place when consumer sentiment and spending spring back to
life and ASPs start rising. We believe that a more convincing uptrend will take hold
only from 2H10 onwards.
Upgrade sector to TRADING BUY. While the fundamentals for the sector remain
uncertain, we think that downside to share prices is limited as valuations are still below
trough levels. We upgrade the sector from Underperform to TRADING BUY.
Furthermore, in line with our market strategy, we think that investors’ risk appetite is
increasing and higher beta plays such as semicon should be in vogue. Investors
should start picking up semicon stocks ahead of the recovery of the sector as
historically, the share prices for both MPI and Unisem cratered 13-18 months before
the upturn of the sector. Sector catalysts include a) a sooner-than-expected revival of
end-user demand and b) a faster-than-expected economic recovery.
Valuation and recommendation
Upgrade to TRADING BUY with higher target price. We are upgrading MPI from
Underperform to TRADING BUY as we think that the downside to its share price is
limited given that it is trading below trough valuations. We expect MPI to report poor
1Q results, after which conditions should stabilise. We retain our earnings forecasts
but raise our price objective from RM3.30 to RM7.40 after scaling back our discount to
its 5-year adjusted historical P/BV from 70% to 40%. The re-rating catalysts for MPI
include a) a qoq improvement in earnings, b) revival in end-demand and c) increasing
risk tolerance. However, we prefer Unisem to MPI, primarily for its higher beta.
For further information, kindly contact Simeon Masuda Koh at 603-2084 9807 or simeon.koh@cimb.com
[ 13 ]

14. Financial summary
FYE Dec 2007 2008 2009F 2010F 2011F
Revenue (RM m) 972.5 1,233.4 825.4 954.1 1,025.9
EBITDA (RM m) 227.2 235.7 151.0 193.3 218.5
EBITDA margins (%) 23.4% 19.1% 18.3% 20.3% 21.3%
Pretax profit (RM m) 117.7 24.0 8.3 29.1 51.1
Net profit (RM m) 119.1 19.8 7.1 24.3 42.9
EPS (sen) 25.3 4.2 1.5 5.2 9.1
EPS growth (%) 44.2% (83.4%) (64.3%) 243.8% 76.7%
P/E (x) 4.8 28.6 80.1 23.3 13.2
Core EPS (sen) 14.1 11.5 1.5 5.2 9.1
Core EPS growth (%) (19.8%) (18.2%) (87.0%) 243.8% 76.7%
Core P/E (x) 8.5 10.4 80.1 23.3 13.2
Gross DPS (sen) 13.7 3.4 3.4 3.9 4.5
Price chart
Dividend yield (%) 11.4% 2.8% 2.8% 3.2% 3.8%
1.6
P/BV (x) 0.7 0.7 0.7 0.7 0.7
9.00
8.00
1.4
ROE (%) 16.3% 2.4% 0.8% 2.9% 5.1%
7.00
1.2
6.00
Net gearing (%) 56.5% 54.9% 43.2% 38.1% 30.0%
5.00
1.0
4.00
P/FCFE (x) (17.0) (112.2) 12.6 9.7 6.7
0.8 3.00
2.00
EV/EBITDA (x) 4.6 4.4 6.2 4.7 3.8
0.6
1.00
% change in EPS estimates - - -
0.00
0.4
May-08 Oct-08 Mar-09
CIMB/Consensus (x) (14.99) 0.68 1.00
Volume 1m (R.H.Scale) Unisem (M) Berhad
Source: Bloomberg Source: Company, CIMB Research, Bloomberg
[ 14 ]

15. DISCLAIMER
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[ 15 ]

16. or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB.
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RECOMMENDATION FRAMEWORK #1*
STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS
OUTPERFORM: The stock's total return is expected to exceed a relevant OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is
benchmark's total return by 5% or more over the next 12 months. expected to outperform the relevant primary market index over the next 12
months.
NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant NEUTRAL: The industry, as defined by the analyst's coverage universe, is
benchmark's total return. expected to perform in line with the relevant primary market index over the next
12 months.
UNDERPERFORM: The stock's total return is expected to be below a relevant UNDERWEIGHT: The industry, as defined by the analyst's coverage universe,
benchmark's total return by 5% or more over the next 12 months. is expected to underperform the relevant primary market index over the next 12
months.
TRADING BUY: The stock's total return is expected to exceed a relevant TRADING BUY: The industry, as defined by the analyst's coverage universe, is
benchmark's total return by 5% or more over the next 3 months. expected to outperform the relevant primary market index over the next 3
months.
TRADING SELL: The stock's total return is expected to be below a relevant TRADING SELL: The industry, as defined by the analyst's coverage universe,
benchmark's total return by 5% or more over the next 3 months. is expected to underperform the relevant primary market index over the next 3
months.
* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be
temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
CIMB-GK Research Pte Ltd (Co. Reg. No. 198701620M)
[ 16 ]

17. RECOMMENDATION FRAMEWORK #2 **
STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS
OUTPERFORM: Expected positive total returns of 15% or more over the next OVERWEIGHT: The industry, as defined by the analyst's coverage universe,
12 months. has a high number of stocks that are expected to have total returns of +15% or
better over the next 12 months.
NEUTRAL: Expected total returns of between -15% and +15% over the next NEUTRAL: The industry, as defined by the analyst's coverage universe, has
12 months. either (i) an equal number of stocks that are expected to have total returns of
+15% (or better) or -15% (or worse), or (ii) stocks that are predominantly
expected to have total returns that will range from +15% to -15%; both over the
next 12 months.
UNDERPERFORM: Expected negative total returns of 15% or more over the UNDERWEIGHT: The industry, as defined by the analyst's coverage universe,
next 12 months. has a high number of stocks that are expected to have total returns of -15% or
worse over the next 12 months.
TRADING BUY: Expected positive total returns of 15% or more over the next 3 TRADING BUY: The industry, as defined by the analyst's coverage universe,
months. has a high number of stocks that are expected to have total returns of +15% or
better over the next 3 months.
TRADING SELL: Expected negative total returns of 15% or more over the next TRADING SELL: The industry, as defined by the analyst's coverage universe,
3 months. has a high number of stocks that are expected to have total returns of -15% or
worse over the next 3 months.
** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the
prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
For further information, kindly contact Simeon Masuda Koh at 603-2084 9807 or simeon.koh@cimb.com
[ 17 ]