UMS Holdings

[Boon]

Five Suppliers Hold 41% of Global Semiconductor Marketshare in 2016
Two years of busy M&A activity boost marketshare among top suppliers. 
06 Dec 2016, by IC Insights
http://www.icinsights.com/data/articles/...ts/938.pdf
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Five Top-20 Semiconductor Suppliers to Show Double-Digit Gains in 2016
Nvidia and MediaTek forecast to register the fastest 2016 growth rates of 35% and 29%, respectively. 
15 Nov 2016, by IC Insights
http://www.icinsights.com/data/articles/...ts/938.pdf
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[weii]

AR2015 is out.
 
Interestingly, Morgan Stanley Asia still holds 5.55% stake as reported in AR2015 (as compared to 5.33% stake as reported in AR2014) - it used to hold 6.44% (as reported in AR2013) of which 6% was for AMAT.
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I detected some selling through the broker Morgan Stanley recently. Anyone knows how to find out the actual number of shares sold through Morgan Stanley these few days? If the number of shares are reasonably large, it may be some selling by Applied Materials ahead of the renewal contract negotiation with UMS in Jan 2017?

[BlueKelah]

AR2015 is out.
 
Interestingly, Morgan Stanley Asia still holds 5.55% stake as reported in AR2015 (as compared to 5.33% stake as reported in AR2014) - it used to hold 6.44% (as reported in AR2013) of which 6% was for AMAT.
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I detected some selling through the broker Morgan Stanley recently. Anyone knows how to find out the actual number of shares sold through Morgan Stanley these few days? If the number of shares are reasonably large, it may be some selling by Applied Materials ahead of the renewal contract negotiation with UMS in Jan 2017?

If AMAT really selling again, share price might have chance dip back to below 50cents, good chance to pick up more shares. 

However sell or not sell, I am of the impression that the contract will still be renewed. As mentioned before, AMAT is making $$ and rolling in the profits, this makes it very unlikely for them to try and get another new company to take over and supply them the parts. It is only when times are bad that big companies will cut cost and consider changing suppliers. The process of recertified and tested and face supply shortages during the changeover which will disrupt ongoing production will be too marfan for these big company.

Trump is looking to be giving nice tax breaks to USA companies so maybe AMAT is preparing to accumulate some cash to repatriate back to their shareholders in USA.

[Nuthing03]

Hi,there will be disclosure if Morgan Stanley's stake breaches 5% or 6%.

[weii]

North America-based manufacturers of semiconductor equipment posted $1.99 billion in orders worldwide in December 2016 (three-month average basis) and a book-to-bill ratio of 1.06, according to the December Equipment Market Data Subscription (EMDS) Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.06 means that $106 worth of orders were received for every $100 of product billed for the month.

SEMI reports that the three-month average of worldwide bookings in December 2016 was $1.99 billion. The bookings figure is 28.3 percent higher than the final November 2016 level of $1.55 billion, and is 47.8 percent higher than the December 2015 order level of $1.34 billion.

...

SEMI continues to track semiconductor industry fab investments in detail on a company-by-company and fab-by-fab basis in its World Fab Forecast and SEMI FabView databases. These powerful tools provide access to spending forecasts, capacity ramp, technology transitions, and other information for over 1,000 fabs worldwide.  For an overview of available SEMI market data, please visit www.semi.org/en/MarketInfo.

http://www.semi.org/en/north-american-se...-ratio-106

[Boon]

North America-based manufacturers of semiconductor equipment posted $1.99 billion in orders worldwide in December 2016 (three-month average basis) and a book-to-bill ratio of 1.06, according to the December Equipment Market Data Subscription (EMDS) Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.06 means that $106 worth of orders were received for every $100 of product billed for the month.

SEMI reports that the three-month average of worldwide bookings in December 2016 was $1.99 billion. The bookings figure is 28.3 percent higher than the final November 2016 level of $1.55 billion, and is 47.8 percent higher than the December 2015 order level of $1.34 billion.

...

SEMI continues to track semiconductor industry fab investments in detail on a company-by-company and fab-by-fab basis in its World Fab Forecast and SEMI FabView databases. These powerful tools provide access to spending forecasts, capacity ramp, technology transitions, and other information for over 1,000 fabs worldwide.  For an overview of available SEMI market data, please visit www.semi.org/en/MarketInfo.

http://www.semi.org/en/north-american-se...-ratio-106

Thanks weii for the update.
 
It is worth noting that the North American based book-to-bill ratio is at 7-month high with bookings approaching the USD 2-billion-mark at end of 2016.
 
Meanwhile, the Japanese figures are also looking good.
 
http://www.digitimes.com/news/a20170125PR201.html
 
Please note that I have started a new tread “Semiconductor Industry News” as it was not quite appropriate to put all industry related news under “UMS”.
 
This would benefit buddies with interests in other related companies as well such as TSMC, AMAT, Global Testing, and many others.
 
Hence, future book-to-bill figures would be posted under “Semiconductor Industry News"
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[ksir]

North America-based manufacturers of semiconductor equipment posted $1.99 billion in orders worldwide in December 2016 (three-month average basis) and a book-to-bill ratio of 1.06, according to the December Equipment Market Data Subscription (EMDS) Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.06 means that $106 worth of orders were received for every $100 of product billed for the month.

SEMI reports that the three-month average of worldwide bookings in December 2016 was $1.99 billion. The bookings figure is 28.3 percent higher than the final November 2016 level of $1.55 billion, and is 47.8 percent higher than the December 2015 order level of $1.34 billion.

...

SEMI continues to track semiconductor industry fab investments in detail on a company-by-company and fab-by-fab basis in its World Fab Forecast and SEMI FabView databases. These powerful tools provide access to spending forecasts, capacity ramp, technology transitions, and other information for over 1,000 fabs worldwide.  For an overview of available SEMI market data, please visit www.semi.org/en/MarketInfo.

http://www.semi.org/en/north-american-se...-ratio-106

Thanks weii for the update.
 
It is worth noting that the North American based book-to-bill ratio is at 7-month high with bookings approaching the USD 2-billion-mark at end of 2016.
 
Meanwhile, the Japanese figures are also looking good.
 
http://www.digitimes.com/news/a20170125PR201.html
 
Please note that I have started a new tread “Semiconductor Industry News” as it was not quite appropriate to put all industry related news under “UMS”.
 
This would benefit buddies with interests in other related companies as well such as TSMC, AMAT, Global Testing, and many others.
 
Hence, future book-to-bill figures would be posted under “Semiconductor Industry News"
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This is well noted.
As i have monitored semicon order book closely also for micro mechanics.
The chart provided by Management do show the correlation between the order and revenue. Although the management deny the causation.

Anw, for ums, noticed that they have totally moved out of their Boustead owned spore building to Msia. IIRC, cost saving was apparent in the quarter results and may prove to be a decent move. Otoh, the big wild card on AMAT has no update thus far?

<small initial stake>

[Boon]

AMAT reported results for its FIRST quarter ending 29 Jan 2017.
 
For 1Q2017: SSG’s net sale was almost flat compared to 4Q2016.
 
1Q2017 new orders was 50% higher compared to 4Q2016 – however new orders for SSG’s foundry products (which Endura falls under) remain flat.  
 
My take is UMS’s FY2016 results is likely to be flat – but can still afford to pay DPS of 6.0 cents.
 
UMS’s contract with AMAT is due for renewal in mid-2017 - interestingly, share price of UMS has run up recently to above 70 cents mark.  
 
SSG : Revenue (USD million):
1Q2014 = 1,484
2Q2014 = 1,584
3Q2014 = 1,476
4Q2014 = 1,434  (FY2014 = 5,978)
1Q2015 = 1,446
2Q2015 = 1,560
3Q2015 = 1.635
4Q2015 = 1,494  (FY2015 = 6,135)
1Q2016 = 1,373 
2Q2016 = 1,587 
3Q2016 = 1,786
4Q2016 = 2,127  (FY2016 = 6,873)
1Q2017 = 2.150
 
SSG : New Orders (USD million)
1Q2014 = 1,569
2Q2014 = 1,664
3Q2014 = 1,565
4Q2014 = 1,334   (FY2014 = 6,132)
1Q2015 = 1,426
2Q2015 = 1,704
3Q2015 = 2,007
4Q2015 = 1,444   (FY2015 = 6,581)
1Q2016 = 1,275  
2Q2016 = 1,966 
3Q2016 = 2,215
4Q2016 = 1,833   (FY2016 = 7,289)
1Q2017 = 2,757
 
New orders (1Q2017) = 2,757 m
Foundry (41%) ~ 1,130 m
DRAM
 (14%) ~ 386 m
Flash (37%) ~ 1,020 m

Logic and other (8%) ~ 220 m 
 
New orders (4Q2016) = 1,833 m
Foundry (64%) ~ 1,173 m
DRAM
 (10%) ~ 183 m
Flash (16%) ~ 293 m
Logic and other (10%) ~ 183 m
 
SSG : Backlog (USD million)
1Q2014 = 1,366
2Q2014 = 1,452
3Q2014 = 1,515
4Q2014 = 1,401
1Q2015 = 1,362
2Q2015 = 1,473
3Q2015 = 1,767
4Q2015 = 1,727
1Q2016 = 1,586
2Q2016 = 2,043
3Q2016 = 2,475
4Q2016 = 2,061
1Q2017 = ?????
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[Boon]

FY2016 Results:
 
Revenue (SGD million）:
FY2010 = 129.033
FY2011 = 114.427
FY2012 = 113.212
FY2013 = 120.486
FY2014 = 109.819
FY2015 = 111.090
FY2016 = 104.204   (DOWN 6% due to weak 1H) = Lowest in 7 years
 
NPAT (SGD million):
FY2010 = 28.745
FY2011 = 27.640 
FY2012 = 16.998  
FY 2013 = 28.880 
FY2014 = 24.929
FY2015 = 34.299   (at record high)
FY2016 = 22.591   (DOWN 34%)
 
Gross Profit Margin :
FY2010 = 56.0%
FY2011 = 55.8%
FY2012 = 49.3%
FY2013 = 53.9%
FY2014 = 54%
FY2015 = 60% (mainly due to favorable USD exchange rate)
FY2016 = 54%
 
Net Profit Margin :
FY2010 = 22.3%
FY2011 = 24.2%
FY2012 = 15.0%
FY2013 = 24.0%
FY2014 = 22.7%
FY2015 = 31%
FY2016 = 21.1%
 
EPS (SGD cent)
FY2010 = 8.25
FY2011 = 8.04
FY2012 = 4.94
FY2013 = 8.40
FY2014 = 5.81
FY2015 = 7.99
FY2016 = 5.26
 
FCF Generated (SGD million):
FY2010 = 23.7
FY2011 = 31.7
FY2012 = 29.3
FY2013 = 25.8 
FY2014 = 28.9
FY2015 = 31.3
FY2016 = 31.2
 
Cash & Cash Equivalent (SGD million)
FY2010 = 20.5 (Debt = 7.139)
FY2011 = 37.9 (Debt = 2.665)
FY2012 = 32.5 (Debt = 17.238)
FY2013 = 29.2 (Debt = 0.0)
FY2014 = 33.8 (Debt = 0.0)
FY2015 = 38.9 (Debt = 0.0)
FY2016 = 42.6 (Debt = 0.249) = at all time high
 
Capex : Purchase of PPE (SGD million)
FY2010 = 7.6
FY2011 = 7.5
FY2012 = 1.7
FY2013 = 2.0
FY2014 = 6.7
FY2015 = 4.5
FY2016 = 2.6
 
DPS (SGD cent)
FY2010 = 5.0
FY2011 = 6.0
FY2012 = 5.0
FY2013 = 6.5
FY2014 = 6.0 (Equivalent to 7.5 cents pre-bonus issue)
FY2015 = 6.0 (Equivalent to 7.5 cents pre-bonus issue)
FY2016 = 6.0
 
Comments: 
1)   Revenue, GPM, NPM, NPAT, EPS were all down compared to FY2015 => drag down by weak 1H2016 plus 2015 was a record year for NPAT.
2)   However, FCF generation ability is intact – in FY2016, FCF generated was 31.2 million.
3)   Cash & cash equivalent of 42.6 million with almost no debt as at 31- Dec-2016, this is an all time high record.
4)   DPS of 6.0 cents is in line with my expectation.

5)   The Group has recently renewed its integrated system business contract with its key customer for another 3 years, with the option to further extend another 3 years, upon reasonable and mutually agreed terms and conditions. This puts the Group in a good position to benefit from the industry growth and also adds stability to its revenue base.

6)   As announced on 24 Feb 2017, UMS will continue to pursue its diversification strategy by investing into a Singapore water and chemical engineering solution company.

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[Boon]

UMS’s integrated system business contract with AMAT has been renewed for another 3 years (with option to further extend another 3 years) - this would add stability to UMS’s revenue base for another 3 years (or 6 years), according to the management.

Hence, based on past performances/records, the semiconductor business segment could reasonably be relied upon to support a DPS of 5 to 6 cents per year for a further 3 years (or 6 years) - assuming the principal terms and conditions of the renewed contract remain unchanged (i.e. most importantly, without any “margin squeeze”).
 
To diversify beyond its traditional semiconductor business segment in order to achieve an alternative revenue source as well as to allow the Group to venture into a high potential growth sector, UMS has so far invested into two new vantures - a Malaysia aerospace company  - and a Singapore water and chemical engineering solution company.
 
With its high cash level and high capacity to borrow, it seems to me that UMS has the “internal resources” to fund these M&A activities without having to rely on any measure of DPS cut back.
 
Until these new ventures could contribute positive OCF to the group, DPS is unlikely to be increased, IMO – but share price seems to have surged ahead………………………………
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