On May 26, UMS Integration CEO Andy Luong acquired 100,000 shares at an average price of S$1.15 per share. This increased his deemed interest from 15.36 per cent to 15.38 per cent. His preceding acquisitions on the open market were in April, with 199,800 shares acquired at S$0.925 apiece and in September 2024 with 600,000 shares acquired at S$0.983 apiece.

 

This followed the Q1 FY2025 business update released on May 9. Luong noted that the group performed well in Q1, achieving improved revenue, gross margin expansion, and healthy cash flow despite a challenging global business environment compared with the same period last year. He added that significant progress was made in meeting the needs of key customers, with sales in Malaysia nearly trebling due to strong orders from a new key customer.

 

Luong also maintained that despite the ongoing trade tensions affecting global sentiment, the order forecasts from the group&rsquo s key customers remain unchanged. 

Analysts are looking forward to a rosier FY2025 for UMS Integration after the group reported earnings of $9.8 million for the 1QFY2025 ended March 31, a negligible change from the same period a year ago.

 

The analysts at UOB Kay Hian (UOBKH), Maybank Securities (Maybank) and DBS Group Research (DBS) have all kept their &ldquo buy&rdquo calls on the stock, at respective raised target prices (TP) of $1.32 from $1.21 previously, $1.19 from $1.16 previously and $1.38 from $1.31 previously.

 

UOBKH&rsquo s John Cheong notes that the group&rsquo s flat earnings came in-line with his expectations, meeting 20% of his full-year estimate.

 

He writes: &ldquo UMS&rsquo gross margin rose to 56% from 53% in 1QFY2024 due to the change in product mix as semiconductor components, which command a higher margin, accounted for a larger share of overall sales.&rdquo

 

In the period, while revenue grew 7% y-o-y due to the larger semiconductor segment, semiconductor sales fell 6% y-o-y, due to what Cheong sees as weaker global chip demand.

 

On the other hand, semiconductor component sales grew 19% y-o-y to $29 million, while integrated systems declined 8% y-o-y to $21 million, due to since-resolved supply chain issues.

 

&ldquo Geographically, all key markets except Malaysia and the US posted lower revenue in 1QFY2025. Revenue in Malaysia surged 287% in 1QFY2025 as UMS continued to ramp up production of semiconductor components for the new major customer,&rdquo writes Cheong.

 

He adds: &ldquo US revenue grew 7% while sales in Singapore eased 5% in 1QFY2025, due to lower shipments. Lower component spares sales caused a 22% slump in Taiwan revenue.&rdquo

 

Despite the ongoing trade war, UMS' key customers' order forecasts have not changed.

 

On this, Cheong writes: &ldquo UMS is encouraged by the strong order flow from its new key customer as it seeks to divert its US supply source to Asia. While US trade tariffs and export controls continue to disrupt global markets, the semiconductor industry remains tariff-exempt for now.&rdquo

 

The analyst, citing industry association SEMI, says that global fab equipment spending for front-end facilities in 2025 is anticipated to increase by 2% y-o-y to US$110 billion ($142.7 billion).

 

He adds that the International Air Transport Association (IATA) expects the number of air travellers around the world to surpass five billion whilst total industry revenue is set to exceed US$1 trillion for the first time in 2025.

 

After reducing his FY2025, FY2026 and FY2027 gross margin assumptions by 0.5 percentage points (ppts) to 50.5% to account for the weaker US dollar against the Malaysian ringgit and Singapore dollar, Cheong has trimmed his earnings by 3%, 4% and 4% respectively.

 

He writes: &ldquo To recap, the majority of UMS&rsquo revenue is denominated in US$, while it incurs local operating costs in Malaysia and Singapore. However, UMS has a natural hedge of 30% as it procures raw materials in US$.&rdquo

 

&ldquo The reason for pegging our price-to-earnings ratio (P/E)-based valuation multiple to above mean is to reflect the better production ramp-up from UMS&rsquo new customer and improvement in UMS&rsquo earnings quality from new contributions from its new customer,&rdquo adds Cheong.

 

Share price catalysts noted by him include higher-than-expected factory utilisation rates, the return of orders for aircraft components to benefit UMS&rsquo subsidiary, JEP Holdings and finally, better-than-expected cost management.

 

Meanwhile, Maybank analyst Jarrick Seet expects the contribution from the group&rsquo s new customer to increase q-o-q as the ramp up in production yields continues to improve, while revenue from its existing customer should also grow slightly y-o-y.

 

He writes: &ldquo Revenue from Malaysia surged 287% y-o-y to $9.4 million from $2.4 million, mainly due to the production ramp up of semiconductor components for the new major customer.&rdquo

 

&ldquo Management expects to hit a revenue target of $1.5 million a week by the end of 2025. It is currently at a $600,000 to $650,000 a week run-rate,&rdquo adds Seet.

 

The analyst concludes: &ldquo Earnings likely bottomed in FY2024 and should improve in the years ahead, especially as its new major customer is finally commencing production and profitability should start to improve q-o-q.&rdquo

 

Upside factors noted by him includes stronger-than-expected revenue momentum following capacity expansion in the FY2022 and better-than-expected contributions from subsidiaries Kalf Engineering, Starke and JEP Holdings.

 

Conversely, downsides include higher-than-expected labour costs, lower-than-expected margins due to negative operating leverage if volume falls and finally, lower-than-expected dividends which may spook yield investors.

 

Finally, DBS&rsquo s Ling understands that while geopolitical risks and rising tariffs present challenges, the group does not anticipate a direct impact on its operations.

 

She writes: &ldquo UMS primarily ships to its customers&rsquo operations in Malaysia and Singapore, adopting a local-for-local model. For direct shipments to the US, which account for approximately 13% of the group&rsquo s revenue in 1QFY2025, applicable tariffs are absorbed by the customers.&rdquo

 

One key risk noted by Ling is the consequence of disruptions to UMS&rsquo relationship with Applied Materials, or any weakness in the latter&rsquo s end-demand, which could significantly weigh on the group&rsquo s performance.

Revenue climbs 7% year on year to S$57.7 million, from S$54 million

 

[SINGAPORE] Semiconductor player UMS Integration : 558 0% on Friday (May 9) reported profit of S$9.8 million for the first quarter ended Mar 31, 2025, almost unchanged from the group&rsquo s profit in the corresponding year-ago period.

 

This translates to earnings per share of S$0.0138, down from S$0.0141 a year earlier.  

 

The group declared an interim dividend of S$0.01 per share for the period under review, lower than the S$0.012 in Q1 FY2024.

 

Revenue for the period climbed 7 per cent year on year to S$57.7 million, from S$54 million.

 

The higher revenue was driven by better performances from both the group&rsquo s semiconductor and aerospace businesses, which grew 6 per cent and 22 per cent, respectively.

 

However, this was offset by a 12 per cent decline in its others segment, as its tooling and material distribution business was affected by the prevailing soft market conditions.

 

UMS chair and chief executive Andy Luong said the group&rsquo s sales in Malaysia &ldquo almost tripled on the back of strong orders from its new key customer&rdquo .

 

The Malaysian market delivered a 287 per cent sales surge to S$9.4 million in Q1 FY2025, from S$2.4 million in FY2024, as the group continued to ramp up production of semiconductor components for a new major customer.

 

&ldquo We are especially encouraged by the strong order flow from our new key customer as it seeks to divert its US supply source to Asia,&rdquo said Luong.

On Apr 7, UMS Integration chairman and CEO Andy Luong acquired 199,800 shares at an average price of S$0.925 a share. This increased his deemed interest in the company from 15.34 per cent to 15.36 per cent. His preceding acquisitions on the open market were in September 2024, with 600,000 shares acquired at S$0.983 a share, and May 2024, with 123,600 shares purchased at S$1.07 apiece.