UMS - CGS-CIMB Research 2022-11-14: 3q22 A New Record

UMS - 3q22 A New Record

  • UMS (SGX:558)'s revenue rose 48.1% y-o-y to S$100.1m in 3Q22, forming 29.8%/28.9% of our/Bloomberg consensus FY22F forecasts, which we deem above expectations. See UMS's announcement dated 11 Nov 2022.
  • All segments registered y-o-y revenue growth, with semiconductor segment revenue surging 49.9% y-o-y to S$89.4m. This was due to higher Integrated System sales, which grew 103.2% to S$44.7m in 3Q22. 3Q22 net profit of S$42.5m (+181% y-o-y, 111$ q-o-q) was above our S$33.6m expectation. 9M22 net profit formed 87.5% of our FY22F forecast.
  • Gross material margin in 3Q22 was 50.5% compared to 54.4% in 3Q21 due to higher material costs for fabricating first articles for new customers. UMS benefitted from the reversal of tax provisions after the resolution of the pioneer tax incentives with the Malaysian government. Hence, 3Q22 net profit had the benefit of a S$11.9m tax credit instead of a tax expense.
  • An interim dividend of S$0.01 was declared. See UMS's Dividend History.
  • While UMS is cognisant of the macro headwinds (inflation, slower demand, supply chain disruptions), the group sees robust outlook for the next six months as it guided that it has an order backlog (amount undisclosed) from its key customer and the group is also positioning itself to take on more orders from its new customers.
  • In its 3Q22 results release, UMS commented that the construction of its new Penang plant is on schedule to be completed by end-FY22F and the group is preparing to ramp up production from mid- FY23F for new customer(s).
  • We raise our FY22-24F revenue forecasts for UMS by 11.1%, leading to a 14.4-15.7% increase in our EPS forecasts. Our target price for UMS increases to S$1.57 (from S$1.37), still based on its 6-year (FY17-22F) average P/E multiple of 10.1x.
  • We reiterate our ADD call on UMS given its EPS growth potential and customer diversification.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

William TNG CFA CGS-CIMB Research | Izabella TAN CGS-CIMB Research | 2022-11-14
SGX Stock Analyst Report ADD MAINTAIN ADD 1.57 UP 1.370

Previous report by CGS-CIMB:
2022-10-13 UMS - Applied Materials Cuts 4Q22 Sales Guidance

Target prices by 2 other brokers at UMS Target Prices.
Listing of broker reports at UMS Analyst Report.

Relevant links:
UMS Share Price History,
UMS Announcements,
UMS Dividends & Corp Actions,
UMS News Articles


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