UMS - DBS Research 2024-05-14: Short-term Hiccups

UMS - Short-term Hiccups

Published:
UMS (SGX:558) | SGinvestors.ioUMS (SGX:558)
  • UMS (SGX:558) reported 1Q24 revenue of S$54mil – dived 33% y-o-y and down 27% q-o-q.

A negative surprise - 1Q24 revenue affected by high inventory & weak demand.

  • The semiconductor segment, which accounts for 85% of UMS's total revenue, plunged 37% y-o-y (-24% q-o-q) to S$45.7mil, mainly caused by the high inventory of one of its key customers. This customer placed a bigger order in 2023 to enjoy the pricing advantage.
  • - Read this at SGinvestors.io -
  • Geographically, all UMS's key markets reported reduced revenue in 1Q24, due to weaker semiconductor demand as well as the slowdown in the material distribution business.
  • - Read this at SGinvestors.io -

Improvement in gross margins due to change in product mix but net margin still lower.

  • Despite the lower revenue, UMS's gross profit margin improved to 53.2% in 1Q24 from 50.2% in 1Q23 and 50.1% in FY23, due to a change in the product mix. The generally higher margin semiconductor components business accounted for 53% of total semiconductor revenue, with the balance 47% from integrated system sales. Over the past few quarters since 4Q22, the components business accounted for less than 50% of total semiconductor sales.
  • 1Q24 net margin, however, was reduced to 18.2%, from 21.3% in 4Q23 and 21.5% in 1Q23, as costs remained high. As a result, net profit for UMS tumbled 44% y-o-y and 37% q-o-q to S$9.8mil.
  • Overall, UMS's 1Q24 revenue and net profit accounted for only 14% and 11% of our forecasts respectively, below expectations.

Contribution from key customer remains weak; recovery expected only from 4Q24.

  • Read more at SGinvestors.io.




Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.




Lee Keng LING DBS Group Research | https://www.dbs.com/insightsdirect/ 2024-05-14



Previous report by DBS:
2024-02-29 UMS Holdings - Outlook Rosy On Multiple Fronts.

Price targets by 3 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





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