UMS Holdings - Maybank Kim Eng 2020-09-29: Customer Still Upbeat

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

UMS Holdings - Customer Still Upbeat


Prospects still positive; maintain BUY

  • Stakeholders see governance, economic performance, product compliance and customer privacy are the most important factors to ensure sustainability. In 2019, UMS Holdings (SGX:558) did not incur any significant environmental fines, and had zero reported incidences of discrimination or corruption. Related-party transactions were carried out carried at arm’s length.
  • Key customer Applied Materials (AMAT) believes strong earnings momentum can be extended into next year.
  • Maintain BUY on UMS Holdings with Target Price of SGD1.36 (2x FY21E P/B).



Arm’s length transactions

  • Like other technology manufacturers, key governance risks that UMS Holdings faces include conflicts of interest, corruption and breach of confidential information. In 2019, UMS Holdings had related-party transactions with Sure Achieve Consultant (where the wife of the founder Andy Luong is a director), as well as with Kalf Engineering, where Mr Luong and Mr Stanley Loh (group financial controller) have an interest. However, these transactions were done on normal commercial terms.


Localisation strategy for workforce

  • UMS Holdings adopts a localisation strategy for overseas operations to ensure on-the-ground teams have a good grasp of local socio-political and cultural sensitivities. UMS Holdings’ environmental exposure is primarily through energy, water and waste disposal.
  • UMS Holdings did not meet its energy and water intensity targets in 2019. Hazardous waste from the production process is disposed of in compliance with regulations. Where possible, scrap materials are recycled.

Capitalising on opportunities from key customer



UMS Holdings is one of the top institutions net buy stocks in 3Q20. See SGX market update: Institutions Net Buyers of Technology, Retail and Tourism Stocks in 3Q20.





Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-09-29
SGX Stock Analyst Report BUY MAINTAIN BUY 1.360 SAME 1.360



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