UMS Holdings

[l0nEr]

Q3 earnings

Earnings are out....
Looks satisfactory to me... revenue up 6%, but net profit down 71%.
Net profit is down mainly because Q3 2011 included the sale of property, exchange rate gain offsetting impairment of inventory, but this year, there is only exchange rate losses and impairment of inventory.
kinda makes me wonder what kind of inventory they actually need to impair, i always thought they build to order...

Taking out those other charges and credits, net profit is more or less flat. Cash flow is still strong and positive.
But the revenue from the CEM business is still weak, 11% y/y but immaterial.

However, debt went up due to the acquistion of the subsidiary IMT-S and IMT-USA.
I always felt that the acquisition is super dodgy. Its as though the the owners are trying to cash out from their side businesses. Still dont see how they actually contribute to higher revenue/profits.

Key thing is still the 1cent dividend is still payable this quarter. Though i suspect there might not be special dividends this year.

[Nick]

Q3 earnings

Earnings are out....
Looks satisfactory to me... revenue up 6%, but net profit down 71%.
Net profit is down mainly because Q3 2011 included the sale of property, exchange rate gain offsetting impairment of inventory, but this year, there is only exchange rate losses and impairment of inventory.
kinda makes me wonder what kind of inventory they actually need to impair, i always thought they build to order...

Taking out those other charges and credits, net profit is more or less flat. Cash flow is still strong and positive.
But the revenue from the CEM business is still weak, 11% y/y but immaterial.

However, debt went up due to the acquistion of the subsidiary IMT-S and IMT-USA.
I always felt that the acquisition is super dodgy. Its as though the the owners are trying to cash out from their side businesses. Still dont see how they actually contribute to higher revenue/profits.

Key thing is still the 1cent dividend is still payable this quarter. Though i suspect there might not be special dividends this year.

You are spot on. No breakdown on IMT Group figures makes it difficult to evaluate how this IPT deal is faring. There is the risk of goodwill impairment in 4Q 2012 if this Company is faring poorly. Net cash has increased from $13 mil in 2Q 2012 to $16 mil in 3Q 2012 due to very strong cashflow. Dividends looks sustainable if there isn't any further dip. We have to wait for Applied Materials results to get some picture on how the industry will fare in 2013. Not sure whether their relocation to Penang will incur further charges in 4Q. The key question is whether will they maintain the quarterly 10% yielding dividend in 4Q 2012. Further sale of shares by insiders may hamper share price movement. I think the CEM division needs a M&A to grow in scale.

(Vested)

[l0nEr]

Yupp, waiting for Applied Materials... probably on 15 Nov.

Hmmm... please correct me if im wrong, but i thought someone mentioned that UMS was stronger in its CEM business before the "major customer" came in. With the expiration of the contract, they are likely to revert back to making CEM stuff, which would provide an added catalyst for growth?

[Nick]

The CEM division used to generate substantial revenue in the mid 2000s ie revenue of US$83.4 million and US$38.3 million in FY2005 and FY2006 respectively (notice the big fall). The EBITDA margin of this division was really low in 2005 and 2006 at < 3%. Revenue dropped significantly to US$7 million in FY 2009 after UMS exited the loss-making HDD business. I don't expect much growth in this division unless they make an acquisition to boost their services offering and production output. Clearly, their 2008 goals of building an O&G and Aerospace unit within the CEM division hadn't worked out and the Changi facility is being used to support Applied Materials instead.

[Nick]

UMS Holdings : No ho ho ho for UMS but you’ll still get a present (CIMB)

http://kfc1973-stock.blogspot.sg/2012/11...s-but.html [Report]

I do agree with the analyst sentiment that 4Q 12 result will be poor judging by Applied Materials slump in its semiconductor division. There is a risk that the goodwill associated with the recent IPT transaction may be written off if it fails to perform as expected. It will not reflect well on the Management if this transpires. At the moment, the share price is supported by expectations of quarterly 1 cents dividend. UMS is currently trading at 41.0 cents.

(Vested)

[l0nEr]

Applied Materials Q4 earnings transcript.
http://seekingalpha.com/article/1012621-...ipt?page=1

"In Q4 FY12, SSG orders were down 36% to $741 million, driven primarily by a lower foundry and NAND bookings, partially offset by logic. Net sales decreased 44% to $870 million, in line with our outlook, with declines across foundry, memory and logic customers. SSG's non-GAAP operating margin was 10.9%."

Management forecast is a little downbeat also...although dont see much visibility in H2 FY13

"if we look at our seasonality picture that we've seen now for 2 years in a row, we start to see orders grow for SSG products in Q1. We believe that's what we're seeing today. It is not -- we don't believe it will be as accentuated as it was last year with such a high peak in Q2 and dropping in Q3. A little hard to tell right now, but maybe a little more muted trend than we saw last year."

Relative more bullish on the 20-nanometer stuff.... does UMS make such stuff????
""our SSG revenue will follow wafer fab equipment, plus whatever share gains that we have. And we feel quite bullish about 20-nanometer. But 20-nanometer is going to be maybe 25,000 or 30,000 wafer starts in 2013."

Backlog for SSG is also low... but the management tries to play down the impact.

Interesting read... but i guess not much growth for UMS next year, i thought maintaining the dividend should be fine?

[Boon]

[/b]

Applied Materials Q4 earnings transcript.
http://seekingalpha.com/article/1012621-...ipt?page=1

"In Q4 FY12, SSG orders were down 36% to $741 million, driven primarily by a lower foundry and NAND bookings, partially offset by logic. Net sales decreased 44% to $870 million, in line with our outlook, with declines across foundry, memory and logic customers. SSG's non-GAAP operating margin was 10.9%."

Management forecast is a little downbeat also...although dont see much visibility in H2 FY13

"if we look at our seasonality picture that we've seen now for 2 years in a row, we start to see orders grow for SSG products in Q1. We believe that's what we're seeing today. It is not -- we don't believe it will be as accentuated as it was last year with such a high peak in Q2 and dropping in Q3. A little hard to tell right now, but maybe a little more muted trend than we saw last year."

Relative more bullish on the 20-nanometer stuff.... does UMS make such stuff????
""our SSG revenue will follow wafer fab equipment, plus whatever share gains that we have. And we feel quite bullish about 20-nanometer. But 20-nanometer is going to be maybe 25,000 or 30,000 wafer starts in 2013."

Backlog for SSG is also low... but the management tries to play down the impact.

Interesting read... but i guess not much growth for UMS next year, i thought maintaining the dividend should be fine?

Robert Castellano thinks the Semiconductor Equipment Market can grow 10% in 2013.

Applied Materials Is Wrong As The Semiconductor Equipment Market Can Grow 10% In 2013

http://seekingalpha.com/article/1048621-...10-in-2013

[Boon]

Robert Castellano thinks the Semiconductor Equipment Market can grow 10% in 2013.

Applied Materials Is Wrong As The Semiconductor Equipment Market Can Grow 10% In 2013

http://seekingalpha.com/article/1048621-...10-in-2013

However, SEMI is less optimistic on 2013

SEMI’s 2012 Year-End Consensus Forecast
Semiconductor New Equipment Market $38.2 Billion for 2012; Recovery in 2014

http://www.semi.org/en/node/44171?id=sgurow1212

[Boon]

McKinsey on Semiconductors (Autumn 2012)

As we approach the end of 2012, two major themes continue to reshape the semiconductor industry: the impact of the mobile-device segment and the increasing pressure for a more sustainable means of growth. In this issue, experts at McKinsey offer their best thinking on how to map a path to a successful future.

http://www.mckinsey.com/client_service/s...t_thinking

[Ray168]

Net profit margin is decreasing ...not a good sign for the company.