The two semiconductor players want to list across the Causeway, where initial public offerings have been on the rise

 

SINGAPORE-LISTED UMS Integration : 558 -0.89% and Grand Venture Technology : JLB +0.64% (GVT) have both received approval for their secondary listing on the main market of Bursa Malaysia. 

 

In a bourse filing on Wednesday (Mar 26), semiconductor manufacturer UMS said such a listing would broaden its reach and widen its investor base, potentially improving the group&rsquo s share liquidity. 

 

It would also give it access to another equity market for future fund-raising in support of the group&rsquo s growth in the coming years, it said. 

 

UMS chairman and chief executive officer Andy Luong added that the group&rsquo s secondary listing will strengthen its role in the &ldquo fast-expanding semiconductor ecosystem&rdquo in Penang, as well as accelerate its strategic business goals in the region. 

 

GVT, another semiconductor player, announced in a separate bourse filing on Tuesday evening that it had won the approval of the Securities Commission Malaysia to go ahead with its proposed secondary listing. 

 

Last September, Bloomberg reported that the company was aiming for a higher valuation by listing in Kuala Lumpur, where initial public offerings have been on the rise.

 

GVT&rsquo s shares had dropped about 7 per cent in Singapore in 2024, and by around 60 per cent from their peak nearly four years before. The company&rsquo s market value was then at about S$188 million. 

 

Both semiconductor companies said that their proposed listing in Malaysia was still subject to change, and that there was no assurance that it would materialise. 

 

The listing is also subject to conditions, such as the approval of shareholders at an extraordinary general meeting to be held later, said UMS. 

 

Shares of UMS closed 0.9 per cent or S$0.01 lower at S$1.11 on Wednesday, before the news. GVT stocks closed at S$0.79, up 0.6 per cent or S$0.005.

In separate announcements on the same day, UMS Integration and Grand Venture Technology say that they have received approval from the Securities Commission Malaysia for the proposed secondary listing on the main market of Bursa Malaysia on March 24. 

 

According to UIMS, the approval was subject to a few conditions, including UMS obtaining shareholders&rsquo approval for the proposed adoption of the new constitution to incorporate provisions relating to the proposed secondary listing, and the company appointing at least two directors whose principal or only place of residence is within Malaysia. 

 

One of the two directors will also need to be appointed as a member of the company&rsquo s audit committee, and the company fully complying with the requirements of the securities commission&rsquo s equity guidelines. 

 

The proposed secondary listing still remains subject to approvals of other relevant authorities in Malaysia, such as the Bursa Securities. 

 

It will also procure the approval of its shareholders at an extraordinary general meeting of the company for the amendments to its existing constitution. 

 

The mainboard listed semiconductor firm first announced the proposed secondary listing in a July 17 bourse filing. It said the move would broaden the company&rsquo s investor reach and widen its investor base, and potentially increase the liquidity of the company&rsquo s shares.

 

It would also enable UMS Integration to tap into additional platforms for future fundraising and provide it with the flexibility to access different equity markets to raise funds.

 

On Dec 31, UMS said that the proposed secondary listing does not involve any offering of shares. 

 

UMS Integration held its IPO on the Singapore Exchange back in 2001, where it raised $51.6 million via a placement of 40 million new shares at $1.29 each. About a decade later, it attempted a dual listing in Korea to tap the semiconductor ecosystem there. But a non-Korean company ahead of UMS in the application was caught for fraud, and the dual listing eventually did not go through.

 

Similar to UMS, Grand Venture Technology has some manufacturing presence in Malaysia as well. It provides manufacturing services for clients in the semiconductor and life sciences space. 

 

UOB Kay Hian, Maybank and DBS are bullish on the semiconductor manufacturer as it boosts production

 

SEMICONDUCTOR equipment manufacturer UMS Integration : 558 -0.88% missed consensus earnings estimates for the full year ended December, but has earned upgrades from three brokerages on the back of a rosier outlook for FY2025 as its production is set to ramp up.

 

Analysts from UOB Kay Hian (UOBKH), Maybank and DBS upgraded the counter to &ldquo buy&rdquo from &ldquo hold&rdquo , with target prices of S$1.21, S$1.16 and S$1.31, respectively.

 

Shares of UMS closed at S$1.12 on Thursday (Mar 6), down 0.9 per cent or S$0.01.

 

Maybank analyst Jarick Seet noted that the company incurred additional costs as it increased production for a new key customer in FY2024. &ldquo UMS has gone through a huge learning curve,&rdquo he said. &ldquo Going forward, we expect execution to improve, and UMS should be able to do (this) with higher margins.&rdquo He believes that the company&rsquo s net margin will improve by up to 1.5 percentage points. However, he also noted that while UMS expects S$30 million in additional orders in FY2025, it is still facing labour shortages. This could pose a challenge to meeting the higher demand.

 

UMS&rsquo new customer contributed about S$20 million to its FY2024 revenue. This is expected to grow to S$50 million in FY2025 as the semiconductor manufacturer continues to ramp up its new product initiatives as well as production of existing goods.

 

For the full year ended Dec 31, UMS posted earnings of S$40.6 million, down 32 per cent from S$60 million the year before. This was due largely to the weaker semiconductor segment, as global chip demand remained muted, said UOBKH analyst John Cheong.

 

Meanwhile, UMS&rsquo FY2024 revenue declined by 19 per cent year on year to S$242.1 million, from S$299.9 million.

 

Despite this, DBS analyst Ling Lee Keng noted that the company&rsquo s revenue has grown quarter on quarter since the first quarter of FY2024. &ldquo Positive guidance from the company&rsquo s two largest global semiconductor customers supports a positive outlook. This momentum is driven by accelerating global artificial intelligence investment and demand,&rdquo she said.

 

DBS raised its earnings estimates for FY2025 and FY2026 by 7 per cent and 8 per cent, respectively, on the back of higher margin assumptions.

 

Similarly, UOBKH raised its earnings forecasts for FY2025 by 9 per cent, and FY2026 by 14 per cent. It also raised its revenue estimates to account for the demand from UMS&rsquo new customer. Cheong explained that the brokerage&rsquo s revised target price for the stock is based on a higher price-to-earnings (P/E) valuation of 17.6 times &ndash above the average that UMS has historically traded at. &ldquo The reason for pegging our P/E-based valuation multiple to above mean is to reflect&rdquo the ramp-up in production and improvement in earnings, in light of UMS&rsquo new customer, the analyst said.

 

In relation to the latest financial results, UMS chairman and chief executive officer Andy Luong said that &ldquo prospects in FY2025 remain bright&rdquo as the group speeds up production at its new Penang facility.

 

Now operational, the 300,000-square-foot manufacturing site is expected to lead to &ldquo significant improvement in delivery, supported by strong order flow&rdquo , UMS added.