UMS Holdings - Maybank Kim Eng 2020-02-25: Beneficiary Of The Upswing

UMS HOLDINGS LIMITED (SGX:558) | SGinvestors.io UMS HOLDINGS LIMITED (SGX:558)

UMS Holdings - Beneficiary Of The Upswing


Core 4Q19 in line; Maintain BUY

  • Excluding a one-off goodwill impairment relating to Kalf Engineering, 4Q19 core net profit of SGD10.2m (+6.7% y-o-y, +11.5% q-o-q) was in line. Our thesis that UMS Holdings (SGX:558) is a beneficiary of the upswing in semiconductor capex, which is still in the early stages, appears playing out.
  • With no significant M&A plans on the horizon, management believes annual DPS of SGD4-6cts is achievable, translating to potential yield of 4-6%.
  • Maintain BUY with ROE-g/COE-g Target Price of SGD1.13 (2.3x FY20E P/B).



4Q19 revenue validates upswing underway

  • UMS's 4Q19 revenue rose 56% y-o-y/ 22.7% q-o-q to SGD40.4m, largely boosted by the semiconductor business. The “Others” segment also grew 88%, from both Starke and Kalf Engineering, which shipped completed projects.
  • However, gross margin fell 9.8ppt y-o-y/ 3.8ppt q-o-q to 51.1%, in part due to a shift in product mix in favour of lower margin Endura assembly.


Outlook is still robust; impact of Covid-19 limited

  • Currently, management does not envisage major direct disruption as a result of Covid-19.
  • For 1Q19, a lack of certain components may delay deliveries for 1-2 weeks, but management remains confident of being able to catch up on deliveries by the end of March. Further, management affirmed that the outlook for FY20 is still robust. This appears consistent with the observations of Applied Materials (key customer) and its industry peers.
  • Based on current visibility, management expects no significant seasonality patterns through FY20.


Pleasant dividend surprise






Lai Gene Lih CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-02-25
SGX Stock Analyst Report BUY MAINTAIN BUY 1.130 SAME 1.130



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