UMS - DBS Research 2023-03-01: Customer Diversification Is A Buffer Against Current Headwinds

• UMS (SGX:558)'s FY22 revenue in line but net profit below on weaker margins. Net profit for FY22 reached a new high of $98.2m (+85% y-o-y) on record revenue of S$372.4m (+37% y-o-y). The robust performance was mainly driven by strong sales, as well as a reversal of the tax provision made by its Malaysian subsidiary after the resolution of its pioneer tax incentives with the Malaysian government. Excluding the reversal of the tax provision, UMS's net profit was up ~57% y-o-y. Overall, UMS's FY22 net profit was below our expectations by 8% but revenue was in line.
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• In terms of segmental breakdown, sales for the semiconductor segment, which accounted for 87% of the total revenue for FY22, rose 33% y-o-y. Within this space, semiconductor integrated system sales leapt 47% y-o-y to S$152.8m in FY22, while component sales climbed 23% to S$170.2m. The aerospace division saw a 50% jump in revenue to S$15m.
• A final dividend of S$0.02 was declared, bringing full year dividend to S$0.05, similar to FY21. See UMS's dividend dates.

UMS – Outlook

Expect near term weakness in the semiconductor industry.

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Lee Keng LING DBS Group Research | https://www.dbs.com/insightsdirect/ 2023-03-01 SGinvestors.io

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