UMS Holdings

Today is a good day. Price surge up as expected after the announcement of 2017 Q1's results. Retail investors will base on the quarter results and buy. However, the results for the subsequent quarters, Q2 to Q4 would highly probably be much lower. Time for me to exit from UMS holdings while the price is right Good luck to all that is holding or buying. The price can win Sheng Siong le. lol

Hopefully price goes up to S$0.990. I have 126,000 shares to sell off!

*Buy low, sell high

DBS research report

https://www.google.com.sg/url?sa=t&sourc...FDjVV1eqdw

(15-05-2017, 06:47 PM)barneyonline Wrote: Today is a good day. Price surge up as expected after the announcement of 2017 Q1's results. Retail investors will base on the quarter results and buy. However, the results for the subsequent quarters, Q2 to Q4 would highly probably be much lower. Time for me to exit from UMS holdings while the price is right Good luck to all that is holding or buying. The price can win Sheng Siong le. lol

Hopefully price goes up to S$0.990. I have 126,000 shares to sell off!

*Buy low, sell high

Personally, I think $1 for UMS is fair value considering its dividend yield and frequency of dividend. Furthermore if you compare it to Micro-Mechanics (trading at $1.20+) which is also in the semiconductor industry, with similar dividend payout, but a lower dividend payout ratio, you would realise the price at ~$1 is fair value. Though if it ever goes above $1.20 I will have to re-evaluate this counter.

Sheng Siong is a good and stable company. But from a purely dividend comparison, UMS is a better dividend machine.

Furthermore, now is only the start of recovery in the semiconductor equipment industry cycle. I don't think now is the best time to let go of UMS.


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(16-05-2017, 11:01 AM)Xiaosaint Wrote:

(15-05-2017, 06:47 PM)barneyonline Wrote: Today is a good day. Price surge up as expected after the announcement of 2017 Q1's results. Retail investors will base on the quarter results and buy. However, the results for the subsequent quarters, Q2 to Q4 would highly probably be much lower. Time for me to exit from UMS holdings while the price is right Good luck to all that is holding or buying. The price can win Sheng Siong le. lol

Hopefully price goes up to S$0.990. I have 126,000 shares to sell off!

*Buy low, sell high

Personally, I think $1 for UMS is fair value considering its dividend yield and frequency of dividend. Furthermore if you compare it to Micro-Mechanics (trading at $1.20+) which is also in the semiconductor industry, with similar dividend payout, but a lower dividend payout ratio, you would realise the price at ~$1 is fair value. Though if it ever goes above $1.20 I will have to re-evaluate this counter.

Sheng Siong is a good and stable company. But from a purely dividend comparison, UMS is a better dividend machine.

Furthermore, now is only the start of recovery in the semiconductor equipment industry cycle. I don't think now is the best time to let go of UMS.


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Hi Xiaosaint,

I have both UMS and micro-machenics in my portfolio. I already sold half of my UMS when i was at 90 cent. Kind of regret..

I dont understnad regarding the payout ratio you said earlier. You mean higher payout ratio is better? Provided the dividend yield is the same?

Thanks



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New DBS research report

https://researchwise.dbsvresearch.com/Re...E=chfchkhe


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(16-05-2017, 11:01 AM)Xiaosaint Wrote:

(15-05-2017, 06:47 PM)barneyonline Wrote: Today is a good day. Price surge up as expected after the announcement of 2017 Q1's results. Retail investors will base on the quarter results and buy. However, the results for the subsequent quarters, Q2 to Q4 would highly probably be much lower. Time for me to exit from UMS holdings while the price is right Good luck to all that is holding or buying. The price can win Sheng Siong le. lol

Hopefully price goes up to S$0.990. I have 126,000 shares to sell off!

*Buy low, sell high

Personally, I think $1 for UMS is fair value considering its dividend yield and frequency of dividend. Furthermore if you compare it to Micro-Mechanics (trading at $1.20+) which is also in the semiconductor industry, with similar dividend payout, but a lower dividend payout ratio, you would realise the price at ~$1 is fair value. Though if it ever goes above $1.20 I will have to re-evaluate this counter.

Sheng Siong is a good and stable company. But from a purely dividend comparison, UMS is a better dividend machine.

Furthermore, now is only the start of recovery in the semiconductor equipment industry cycle. I don't think now is the best time to let go of UMS.


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Hi Xiaosaint. Thanks for replying Smile

I may be wrong. But my analysis why Micro Mechanics is much better than UMS Holdings is due to the following:

1. UMS holdings revenue has been decreasing over the years while revenue for Micro Mechanics has been increasing.
2. The dividend for Micro Mechanics has been increasing over the years as companied to UMS holdings
3. The first quarter of the financial report is highly false positive. The subsequent quarters are going to be lower than Q1. The first quarter result is due to re-contract and back-dated revenues from 2016. You can do a technical and fundamental analysis against the graph for the year 2014 when the re-contract occurred. The graph is highly the same.
4. Lastly, the book value share price is more than double. Meaning we are paying S$2 for something that worth S$1. 

Wanted to sell my shares at S$0.990, but the shares drop to lowest S$0.960. Sad

I could be wrong. Just learning, trying and contributinv to this chat Smile

(16-05-2017, 01:30 PM)barneyonline Wrote:

(16-05-2017, 11:01 AM)Xiaosaint Wrote:

(15-05-2017, 06:47 PM)barneyonline Wrote: Today is a good day. Price surge up as expected after the announcement of 2017 Q1's results. Retail investors will base on the quarter results and buy. However, the results for the subsequent quarters, Q2 to Q4 would highly probably be much lower. Time for me to exit from UMS holdings while the price is right Good luck to all that is holding or buying. The price can win Sheng Siong le. lol

Hopefully price goes up to S$0.990. I have 126,000 shares to sell off!

*Buy low, sell high

Personally, I think $1 for UMS is fair value considering its dividend yield and frequency of dividend. Furthermore if you compare it to Micro-Mechanics (trading at $1.20+) which is also in the semiconductor industry, with similar dividend payout, but a lower dividend payout ratio, you would realise the price at ~$1 is fair value. Though if it ever goes above $1.20 I will have to re-evaluate this counter.

Sheng Siong is a good and stable company. But from a purely dividend comparison, UMS is a better dividend machine.

Furthermore, now is only the start of recovery in the semiconductor equipment industry cycle. I don't think now is the best time to let go of UMS.


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Hi Xiaosaint. Thanks for replying Smile

I may be wrong. But my analysis why Micro Mechanics is much better than UMS Holdings is due to the following:

1. UMS holdings revenue has been decreasing over the years while revenue for Micro Mechanics has been increasing.
2. The dividend for Micro Mechanics has been increasing over the years as companied to UMS holdings
3. The first quarter of the financial report is highly false positive. The subsequent quarters are going to be lower than Q1. The first quarter result is due to re-contract and back-dated revenues from 2016. You can do a technical and fundamental analysis against the graph for the year 2014 when the re-contract occurred. The graph is highly the same.
4. Lastly, the book value share price is more than double. Meaning we are paying S$2 for something that worth S$1. 

Wanted to sell my shares at S$0.990, but the shares drop to lowest S$0.960. Sad

I could be wrong. Just learning, trying and contributinv to this chat Smile

Good try!

1)  Revenue of UMS has been decreasing but cash generating ability is intact.
2)  DPS of UMS has actually been increasing as well on pre-bonus basis – see tabulation below - Cash level is at all time high – all these were possible only if FCF/revenue generated from operation is rising despite of decreasing revenue.
3)  UMS’s good 1Q2017 results were boosted by the current buoyant semiconductor industry. We do not know how long this trend would continue but it is looking promising. We do not know how the newly negotiated contract with AMAT have impacted the latest 1Q results, and we do not know its long term impacts going forward – it could be net positive, net negative, or neutral. The previous contract renewal (the one before the recent renewal) was done 5 years ago in 2012 (not in 2014). The FY2012 result was bad and there was no evidence to suggest that it has got anything to do with the contract renewal. If the uptrend in the semicon industry continues, with NEW revenue/profit contribution from Kalf Engneering, it is highly likely that FY2017 could turn out to be a good year, if not a record year for UMS. Only time will tell.
4)  P/BV of MM is higher than UMS but there is a lot of “good will” on the BS of UMS.
5) Which is a better "bet" ? It depends...............................
 
DPS (SGD cents)
FY2010 = 5.0
FY2011 = 6.0
FY2012 = 5.0
FY2013 = 6.5
FY2014 = 6.0 (post-bonus) ; (Equivalent to 7.5 cents pre-bonus issue)
FY2015 = 6.0 (post-bonus) ; (Equivalent to 7.5 cents pre-bonus issue)
FY2016 = 6.0 (post-bonus) ; (Equivalent to 7.5 cents pre-bonus issue)
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(16-05-2017, 01:30 PM)barneyonline Wrote: Hi Xiaosaint. Thanks for replying Smile

I may be wrong. But my analysis why Micro Mechanics is much better than UMS Holdings is due to the following:

1. UMS holdings revenue has been decreasing over the years while revenue for Micro Mechanics has been increasing.
2. The dividend for Micro Mechanics has been increasing over the years as companied to UMS holdings
3. The first quarter of the financial report is highly false positive. The subsequent quarters are going to be lower than Q1. The first quarter result is due to re-contract and back-dated revenues from 2016. You can do a technical and fundamental analysis against the graph for the year 2014 when the re-contract occurred. The graph is highly the same.
4. Lastly, the book value share price is more than double. Meaning we are paying S$2 for something that worth S$1. 

Wanted to sell my shares at S$0.990, but the shares drop to lowest S$0.960. Sad

I could be wrong. Just learning, trying and contributinv to this chat Smile

just 1 thing to note on the "high" price to book number thing. It only doesn't make sense when we are valuing the company from liquidation standpoint, ie. the company goes into voluntary liquidation tomorrow and all proceeds (net of asset sales after paying all liabilities) are distributed to equity share holders tomorrow.

As Boon mentioned in another thread, there is alot of "goodwill" on the balance sheet, from the expertise of the CEO+the know-how of all its engineering staff, to the contract signed with AMAT - all these are not recorded on the balance sheet as tangible items. That is why the Market is willing to pay above NAV for a piece of it, because replacement cost should be much higher than liquidation cost (replacement cost is the cost required to startup an entirely new UMS tomorrow, replicating everything it has and producing similar quality/quantity to its customers)

(16-05-2017, 04:30 PM)Boon Wrote:

(16-05-2017, 01:30 PM)barneyonline Wrote:

(16-05-2017, 11:01 AM)Xiaosaint Wrote:

(15-05-2017, 06:47 PM)barneyonline Wrote: Today is a good day. Price surge up as expected after the announcement of 2017 Q1's results. Retail investors will base on the quarter results and buy. However, the results for the subsequent quarters, Q2 to Q4 would highly probably be much lower. Time for me to exit from UMS holdings while the price is right Good luck to all that is holding or buying. The price can win Sheng Siong le. lol

Hopefully price goes up to S$0.990. I have 126,000 shares to sell off!

*Buy low, sell high

Personally, I think $1 for UMS is fair value considering its dividend yield and frequency of dividend. Furthermore if you compare it to Micro-Mechanics (trading at $1.20+) which is also in the semiconductor industry, with similar dividend payout, but a lower dividend payout ratio, you would realise the price at ~$1 is fair value. Though if it ever goes above $1.20 I will have to re-evaluate this counter.

Sheng Siong is a good and stable company. But from a purely dividend comparison, UMS is a better dividend machine.

Furthermore, now is only the start of recovery in the semiconductor equipment industry cycle. I don't think now is the best time to let go of UMS.


Sent from my iPhone using Tapatalk

Hi Xiaosaint. Thanks for replying Smile

I may be wrong. But my analysis why Micro Mechanics is much better than UMS Holdings is due to the following:

1. UMS holdings revenue has been decreasing over the years while revenue for Micro Mechanics has been increasing.
2. The dividend for Micro Mechanics has been increasing over the years as companied to UMS holdings
3. The first quarter of the financial report is highly false positive. The subsequent quarters are going to be lower than Q1. The first quarter result is due to re-contract and back-dated revenues from 2016. You can do a technical and fundamental analysis against the graph for the year 2014 when the re-contract occurred. The graph is highly the same.
4. Lastly, the book value share price is more than double. Meaning we are paying S$2 for something that worth S$1. 

Wanted to sell my shares at S$0.990, but the shares drop to lowest S$0.960. Sad

I could be wrong. Just learning, trying and contributinv to this chat Smile

Good try!

1)  Revenue of UMS has been decreasing but cash generating ability is intact.
2)  DPS of UMS has actually been increasing as well on pre-bonus basis – see tabulation below - Cash level is at all time high – all these were possible only if FCF/revenue generated from operation is rising despite of decreasing revenue.
3)  UMS’s good 1Q2017 results were boosted by the current buoyant semiconductor industry. We do not know how long this trend would continue but it is looking promising. We do not know how the newly negotiated contract with AMAT have impacted the latest 1Q results, and we do not know its long term impacts going forward – it could be net positive, net negative, or neutral. The previous contract renewal (the one before the recent renewal) was done 5 years ago in 2012 (not in 2014). The FY2012 result was bad and there was no evidence to suggest that it has got anything to do with the contract renewal. If the uptrend in the semicon industry continues, with NEW revenue/profit contribution from Kalf Engneering, it is highly likely that FY2017 could turn out to be a good year, if not a record year for UMS. Only time will tell.
4)  P/BV of MM is higher than UMS but there is a lot of “good will” on the BS of UMS.
5) Which is a better "bet" ? It depends...............................
 
DPS (SGD cents)
FY2010 = 5.0
FY2011 = 6.0
FY2012 = 5.0
FY2013 = 6.5
FY2014 = 6.0 (post-bonus) ; (Equivalent to 7.5 cents pre-bonus issue)
FY2015 = 6.0 (post-bonus) ; (Equivalent to 7.5 cents pre-bonus issue)
FY2016 = 6.0 (post-bonus) ; (Equivalent to 7.5 cents pre-bonus issue)
___________________________________________________________________________________________________________________

Hi Boon. Nice meeting you!

Seems like the way I analyze is different from everyone. Hahaha!

1. It is good that the cash generating ability is intact. However, when I took a look at the cash generated from operation, it saturates at around 35 plus minus since year 2014 (3 years plus). A decreasing revenue combines with a constant cash generated from operations seems like the growth is nil or negative. Furthermore, with Applied Materials knowing UMS holdings depends on them for survival, the contract signed recently request UMS holdings to reduce the cost per unit as mentioned by the CEO, Andy. 

2. Based on my calculation, the DPS stays at 6.0 since 2014 (3 years). 

3. I thought the previous contract was signed 3 years ago, 2014. I could be wrong. But basing on the graph alone in year 2014, it seems to replicate the current curve. I also believe what goes up must come down. Perhaps I am wrong. Hahaha. 

4. P/BV of MM is higher but is more supported than for UMS Holdings. The reason is due to increasing revenue for MM. There is actually formula to take into consideration EPS and growth into P/BV to determine a new value for P/BV. If we do a discounted cash flow, you will see that UMS holdings seems to be decreasing over the years while MM is actually increasing. Of course, my analysis and your could be different and my could be wrong.

5. I also did a predictive analytics on a couple of things which may not be true to most people. But there could be a financial crisis in 2017, around 10 years after a financial crisis (Global Financial Crisis on 2007), and another 20 years after a financial crisis (Asian Financial Crisis 1997). Of course, this may not be true. But who knows, a crisis usually happens when everyone is overly optimistic. I still choose to believe the increase of the share prices for most stock has reached its end.

Hi barneyonline,
True, over the past 5~7 years, MM has been growing while UMS stays near flat, but past performances are not indicative of future performances.
If you trust the management guidance below, it means back to GROWTH path again for UMS. Andy is bullish.

It would be interesting to track both performances of MM and UMS going forward. Let the race begin.............
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Outlook
The demand for semiconductor is on a rapid rise, fuelled by the boom in disruptive technology and continuous push for automation and innovation. The largest growth drivers for the industry are mobile devices (including devices using solid state drives), automotive and IoT (Internet of Things).

According to Semiconductor Equipment & Materials International (SEMI), worldwide sales of semiconductor manufacturing equipment totalled US$41.24 billion in 2016, representing a year-on- year increase of 13%. Fab equipment spending is also expected to reach an industry all-time record of more than US$46 billion in 2017. The value is expected to climb higher in 2018, with spending hitting near the US$50 billion mark.

These buoyant trends augur well for UMS which is well-poised to ride on the growth as it will be stepping up plans to expand production capacity, including a ramp-up in fab activities in the coming months. The group intends to invest a further RM80 million in Penang over the next few years which include building new cleanrooms, take advantage of a larger pool of talent and a more favorable tax status.

Mr Andy Luong, Chief Executive Officer of UMS Holdings, said: “The outlook continues to be positive for the global semiconductor sector which has enabled the Group to accelerate its growth trajectory in both revenue and profit. UMS intends to continue rewarding shareholders with good dividends and has hence proposed an interim tax-exempt dividend of 1 cent to be payable on 27 July, 2017.

“We have also adopted a diversification strategy to broaden our revenue base and income streams as well as to lower exposure risks to any single source or market. Going forward, we will continue to drive growth in the existing semiconductor business segment while pursuing business opportunities in potential growth areas relating to the provision of water and chemical engineering solutions.”

UMS had acquired in March a 51% stake in Kalf Engineering, a company that specialises in water and chemical engineering solutions for the offshore, power generation and chemical industries. Kalf has currently in hand seven projects in Asia, the Middle East and South America worth approximately S$13 million, and is also in the midst of procuring additional projects.

Five of the current projects are expected to be completed in the second half of 2017 with another two in China and Middle East expected to be completed in the second half of 2018. The five projects, scheduled for completion this year, will be expected to contribute to the Group’s financial performance in FY2017. 
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