UMS

UMS reports net profit of S$11.3 million for 1QFY2018

Singapore, May 11 2018 - SGX Mainboard-listed UMS Holdings Limited (“UMS” or “The Group”) continued to reward shareholders with a proposed 1 cent tax-exempt interim dividend as it maintained its profitable track record. The Group reported a net profit of $11.3 million for the first quarter of the financial year 2018 (1Q2018) ended 31 March 2018. Net profit was maintained despite revenue easing 10% to $37.5 million for the quarter.

The lower Group turnover was due to a 9% dip in revenue from the semiconductor business while sales from its “Other” segments fell 44%. Most of the Group’s revenue is denominated in USD which has depreciated against the SGD when compared to 1Q2017.

The Group's profitability was boosted by better gross material margins in 1Q2018 which jumped to 57% from 51% in 1Q2017 as it benefitted from higher component sales vs Integrated Systems sales. Component sales enjoy a higher margin compared to Integrated Systems sales. The improved gross margin reflects the Group’s success in growing its component business to boost its bottom line. The Group has also slashed its income tax expense by 30% as it booked more profits in its Malaysian subsidiary which enjoys Pioneer Tax incentive in Malaysia. Depreciation charges went down by 9% as some of its fixed assets were fully depreciated. Rental fees were cut by 46% as UMS shifted more of its operations to Malaysia. The Group also registered a maiden profit contribution of S$16,000 from its newly acquired associate - Catalist-listed JEP Holdings Ltd.

Profits attributable to shareholders edged up 2% to S$11.4 million in 1Q2018 vs $11.2 million in 1Q2017

Within the semiconductor segment, those of Semiconductor Integrated System decreased 24% to S$18.4 million in 1Q2018 from S$24.2 million in 1Q2017; while revenue from component sales went up by 12% to S$18.7 million - up from S$16.7 million in 1Q2017. Geographically, the first quarter saw revenue from Singapore dip 24% due to weaker demand for the semiconductor Integrated System sales; while US component sales for new system built rose 47% compared to 1Q2017. Revenue from Taiwan rose 16% on the back of higher component spares sales while those in “Other” regions fell 80% due mainly to lower component sales to a customer in China.

Strong Cashflow 

UMS continued to achieve strong cash flow with $15.2 million in net cash from operating activities and $12.0 million in free cash flow in 1Q2018. Bank borrowings pared down by $2.0 million with the Group’s net cash and cash equivalents remaining healthy at S$23.8 million as of 31 Mar 2018. During the first quarter, the Group made an investment of $28.2 million for a 28.6% stake in Catalist-listed JEP Holdings Ltd, in line with its diversification strategy.

The Group’s prospects remain bright in 2018 because of sustained high demand in orders from its key customer. The global semiconductor industry is predicted to continue its strong growth trajectory despite challenges to world economies posed by the ongoing US-China trade dispute

The Group is progressing well with its due diligence for the proposed acquisition of a 70% stake in a non-ferrous metal alloys specialist, Starke Singapore Pte Ltd (“Starke”) which will be funded by internal resources. This proposed deal is in line with UMS' strategy to strengthen its upstream integration to reap cost savings and enhance business and operational synergies within the Group through a more efficient supply chain to serve global customers.

Barring any unforeseen circumstances, prospects remain bright for FY2018.

Quote : http://infopub.sgx.com/FileOpen/UMS%201Q2018%20Press%20Release%20-%20Final.ashx?App=Announcement&FileID=505143

From TA point of view, it has turned bearish after hitting the high of 1.35 on 16 Mar.
The price was corrected from 1.35 to a low of $1.00 last Friday.

It is now trading below most of its Moving average such as 20,50 & 100 days MA.

Currently, the price is coincide with its 200 days moving average.

Hopefully , we may see a bounce-off from here and rises higher to retest 1.08. If not, breaking down of 99 cents would be rather ugly. It may continue to go down to retest 93.5 cents then 90 cents.

Not a call to buy or sell.

Please do your own due diligence.