UWC Bhd shares has been maintained with a 'Hold' call with a lower 52-week target price of RM2.99 at HLIB Research after reporting a massive drop in its profitability.

On Monday, the company posted a 75% year-on-year decline in net profit for its second quarter ended Jan 31, 2024 (2Q24), mainly due to the semiconductor market downturn impacting revenue and increased expenditure for future growth.

Net profit fell to RM4.8 million from RM19.1 million in the previous year, with quarterly revenue decreasing by 33.5% to RM61.1 million.

For the first six months, it posted a net profit of RM9.2 million, down 39% from the same period a year earlier, on turnover of RM106.6 million which was 42% lower than the year before.

In its report released on Monday, HLIB Research said the 1H24 core profit after taxation and minority interests (Patami) of RM5 million missed its and street estimates due to lower-than-expected revenue and EBITDA margin.

It said the order book was flat QoQ at RM120 million where the semiconductor front end made up 15% of the total.

Hence, it had lowered the company's share target price to RM2.99 from RM3.24. The stock, trading at RM3.20 on Monday, dropped 19 sen or 6% to RM2.99 yesterday.

"UWC remains optimistic towards its business outlook and has started to see signs of recovery. It is expanding capacity for front-end semiconductor manufacturing business and EV projects," it added.