UMS HOLDINGS LIMITED (SGX:558)
UMS - Expecting A Solid 3Q22 But FY23 Uncertain
- UMS (SGX:558)'s 3Q22E results likely remained strong and will be topped up with a S$15m tax provision write-back. We estimate S$88.3m revenue and PATMI of S$33m for 3Q22, up 31% and 118% y-o-y. A dividend of S$0.01 should be declared.
- However, we are cautious on the semi-con sector and maintain a HOLD on UMS due to macro uncertainties and the US’s ban on chip exports to China. Our target price of S$1.20 is based on 8.5x FY22E P/E.
- We prefer Venture Corp (SGX:V03) in the Singapore tech space for its diversification and resilience.
UMS's positive results may be priced in
- The market appears to have priced in positive FY22E results and its focus has turned to the outlook of UMS for FY23E and its new customer potentially ramping up after construction of its 300,000-sqft plant in Penang has been completed.
- We believe until there is more certainty, UMS's share price is likely to remain lacklustre. It may have further downside even on its current share price if there is more negative news and global chipmakers are de-rated further, in which case UMS's share price movement is likely to be mainly directed by market sentiment and key macro news.
New customer will be key to earnings
Waiting for more clarity on outlook
- We have seen in many previous cycles downswings in the semiconductor cycle can be swift and deep. We are thus taking a conservative approach and downgraded UMS to HOLD until clearer signals emerge. See earlier report: UMS Holdings - Maybank Research 2022-10-12: Victim Of Sector De-Rating.
- In the near term, i.e. 2H22, fundamentals should remain robust for UMS with strong growth due to its robust orderbook.
- See
Jarick Seet
Maybank Research
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https://www.maybank-ke.com.sg/
2022-11-02
SGX Stock
Analyst Report
1.200
SAME
1.200
