UMS - CGSI Research 2024-02-29: New Plant Starts Volume Production In March

• UMS (SGX:558)'s FY23 revenue fell 19% y-o-y given the slowdown in the semiconductor industry (its semicon segment made up 86.7% of FY23 revenue). This led to a 39% y-o-y decline in FY23 net profit to S$59.98m.
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• A final dividend of 2.20 cents was declared.

1Q24F could be weaker q-o-q and y-o-y

• Management guided that the semiconductor sector could still see some near-term softness due to surplus inventories issues, but the longer-term prospects look brighter.
• In our view, it is likely that UMS’s key customer shifted some orders planned for 1Q24F to 4Q23, similar to what Frencken (SGX:E28) experienced. Hence, UMS’s 1Q24F net profit could be lower both q-o-q (4Q23: S$15.67m net profit) and y-o-y (1Q23: S$17.36m net profit).

Management positive on outlook

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• UMS expects an uptick in order flow in the coming months. In its 1H23 results briefing, UMS had guided that it could achieve at least US$30m in revenue from this customer in FY24F.

Reiterate ADD

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William TNG CFA CGS International Research | https://itrade.cgsi.com.sg 2024-02-29 SGinvestors.io

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