UMS Holdings - Maybank Kim Eng 2020-05-13: Dividend Upside

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

UMS Holdings - Dividend Upside


Possibility of SGD0.06 DPS in FY20E; BUY

  • UMS Holdings (SGX:558) delivered 1Q20 net profit of SGD10.7m (+53.4% y-o-y, +15.8% q-o-q) that was ahead of our expectation, despite supply being impeded by MCO in Malaysia.
  • Given management’s cautiously optimistic tone on outlook, we keep our earnings forecasts unchanged. We believe UMS may revert to SGD0.06 annual DPS payout, in view of reduced appetite for growth related investments amid the current uncertain climate. This should support share price.
  • Maintain BUY with ROE-g/COE-g Target Price of SGD0.96 (based on 2x FY20E P/B).



1Q20 slightly impeded by MCO in Malaysia

  • UMS' 1Q20 revenue rose 21.9% y-o-y to SGD34.9m, largely driven by the recovery in the semiconductor segment, but was 13.7% lower q-o-q as Endura wafer transfer module assembly experienced some delays due to the MCO in Malaysia.
  • UMS’ Penang facilities, where volume manufacturing takes place, has resumed normal operations on 29 Apr. Gross margin was flat y-o-y at 53.3% as higher margin from increased component sales was offset by lower margin from increased material distribution sales.
  • Associate JEP Holdings (SGX:1J4) is expected to experience a difficult 2H20 due to aerospace headwinds.


Demand trends intact

  • Management appear cautiously optimistic towards outlook. Demand visibility has been largely intact since last quarter. Management are more wary towards potential supply side issues. Some of these issues may relate to the supply chain (e.g. difficulty securing components) and foreign-workers in Singapore.
  • We believe UMS may be able to sustain 1Q20 earnings performance in 2Q20.


Buy the dip






Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-05-13
SGX Stock Analyst Report BUY MAINTAIN BUY 0.960 SAME 0.960



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