- UMS (SGX:558) reported 3Q23 revenue of S$71.3m and PATMI of S$15.3m, in line with our/consensus estimates. Management expects 4Q23E semi-con revenue to be flat but the aerospace segment to continue to pick up.
- - Read this at SGinvestors.io -
- Interim dividends were increased to S$0.012, bringing yield to 4.3% for FY24E. As a result, we maintain BUY on UMS with a target price of S$1.44, pegged to 11x FY24E P/E.
Margins improve on new contract terms
- UMS's 3Q23 revenue decreased 29% y-o-y and PATMI fell 64% but margins improved materially, growing to 51.2% from 50.5% in 3Q22, mainly due to better FX as well as new contract terms with its key customer where lower volume resulted in higher pricing.
- - Read this at SGinvestors.io -
- Customer orders are still expected to pick up in FY24E but remain stable for 4Q23E. Aerospace continues to be profitable and is still benefiting from a sector recovery.
Ramp up still on track
- UMS has received in-principle agreement with a new customer whom we believe to be LAM Research (Nasdaq: LRCX) for a 3-year contract with a renewal option. UMS still expects S$30m contribution in FY24 and S$300m top-line contributions p.a. in the next 3- 5 years.
- If all goes well, FY24E could potentially be a good year for UMS.
Better prospects plus attractive 4.3% yield
- Read more at SGinvestors.io.
Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @ https://www.maybanktrade.com.sg/.
Jarick Seet Maybank Research | https://www.maybank-ke.com.sg/ 2023-11-14
Read also Maybank's most recent report:
2024-08-14 UMS - 2Q24 Disappoints; Outlook Still Muted.
Previous report by Maybank:
2024-05-13 UMS - Downgrade To SELL; Losing Market Share.
Price targets by other brokers at UMS Target Prices.
Listing of research reports at UMS Analyst Reports.
Relevant links:
UMS Share Price History,
UMS Announcements,
UMS Dividends & Corporate Actions,
UMS News Articles
