UMS Holdings

[NTL]

Ok, another 1c.

[Boon]

2Q2013 Results：

1) UMS declares 15th consecutive quarterly dividend of at least SGD 1.0 cents
2) 2Q2013 results improved compared to that of 1Q2013.
3) 1H2013 results were down compared to 1H2012, due to very strong first half in 2012.
4) UMS’s good cash flow generation ability continues
5) Generated positive operating cash flow of SGD 14.1 million in 1H2013
6) As of 30 June 2013, despite settling all the Group’s bank borrowings, UMS net cash and cash equivalents remain healthy at SGD 27.4 million.
7) Management expects that the recovery of the global semiconductor equipment industry will most likely take a “breather” in the short term, following two consecutive quarters of robust demand driven by the foundries’ investment programs. This “breather” is expected to be short with foundries resuming their capital expenditure programs later in the year or early next year.

Revenue (SGD million）:
FY2012 =113.212
1Q2012 = 31.992
2Q2012 = 36.637
3Q2012 = 22.952
4Q2012 = 21.631
1Q2013 = 27.845
2Q2013 = 32.821

NPAT (SGD million) :
FY2012 =16.998
1Q2012 = 6.032
2Q2012 = 7.625
3Q2012 = 2.129
4Q2012 = 1.212
1Q2013 = 5.256
2Q2013 = 7.837

Gross Profit Margin :
FY2012 = 49%
1Q2012 = 52%
2Q2012 = 49%
3Q2012 = 54%
4Q2012 = 41%
1Q2013 = 49%
2Q2013 = 50%

Net Profit Margin :
FY2012 = 15.01%
1Q2012 = 18.85%
2Q2012 = 20.81%
3Q2012 = 9.28%
4Q2012 = 5.60%
1Q2013 = 18.88%
2Q2013 = 23.88% (=21.6% excluding FX gain)

(Vested)

[Drizzt]

thanks boon for the number crunching.

[Nick]

Thanks Boon. With the large (and growing) cash-pile, I wonder would we see an increase in dividend to 6.0 cents assuming 2H 13 performance mirrors 1H 13 ? The plunge in 4Q 2012 gross margins now seems to be one-off with decent GM in the past 2 quarters. Overall pleased with the results and dividends.

(Vested)

[KopiKat]

With the large (and growing) cash-pile, I wonder would we see an increase in dividend to 6.0 cents assuming 2H 13 performance mirrors 1H 13 ?

Does that mean the expected "breather" will not impact UMS in the short term as they have enough orders to work on? ie. impact will be in the form of lesser new orders.

[Nick]

With the large (and growing) cash-pile, I wonder would we see an increase in dividend to 6.0 cents assuming 2H 13 performance mirrors 1H 13 ?

Does that mean the expected "breather" will not impact UMS in the short term as they have enough orders to work on? ie. impact will be in the form of lesser new orders.

The 1H 13 FCF of $13.5 million works out to 3.9 cents per share and the cash hoard of $27.4 million works out to 7.9 cents per share. So I do not think the 5 cents dividend will be affected unless UMS ends up making losses in 2H 13. The 'breather' will probably result in a drop of revenue and earning as compared to 2Q 2013. UMS semiconductor division generated $32.3 million revenue in 2Q 2013 while in 3Q 2012, it generated $21.9 million revenue. So will it drop to a similar level as 3Q 2012 ? I think we will find out when SEMI unveils the book to bill ratios in the coming weeks for the month of July. Management did highlight that the recovery will resume in 4Q 2013 so let's see how accurate their 'predictions' are. Inevitably, this is a cyclical industry so I expect profits and losses time to time.

[KopiKat]

With the large (and growing) cash-pile, I wonder would we see an increase in dividend to 6.0 cents assuming 2H 13 performance mirrors 1H 13 ?

Does that mean the expected "breather" will not impact UMS in the short term as they have enough orders to work on? ie. impact will be in the form of lesser new orders.

The 1H 13 FCF of $13.5 million works out to 3.9 cents per share and the cash hoard of $27.4 million works out to 7.9 cents per share. So I do not think the 5 cents dividend will be affected unless UMS ends up making losses in 2H 13. The 'breather' will probably result in a drop of revenue and earning as compared to 2Q 2013. UMS semiconductor division generated $32.3 million revenue in 2Q 2013 while in 3Q 2012, it generated $21.9 million revenue. So will it drop to a similar level as 3Q 2012 ? I think we will find out when SEMI unveils the book to bill ratios in the coming weeks for the month of July. Management did highlight that the recovery will resume in 4Q 2013 so let's see how accurate their 'predictions' are. Inevitably, this is a cyclical industry so I expect profits and losses time to time.

Thanks! I was wondering cos' you mentioned an assumption of 2H13 results mirroring 1H13.
PS. UMS also mentioned that the "breather" may in the worst case last till early next year.

[Boon]

1) At 31-Dec-2011, cash & cash equivalent = 37.947 million; debt = 2.527 million (finance lease)
2) In 1Q2012 UMS acquired “IMT group” with a price tag of SGD 27.061 million.(note: this was cash flow figure); UMS drew down 15.1 million short term loan during the period.
3) In 2Q2012, UMS made 5 million loan repayment
4) In 3Q2012, UMS borrowed another 7 million
5) In 1Q2013, UMS made 15.1 million loan repayment
6) In 2Q1013, UMS made 2.0 million loan repayment(borrowed 8 million and repaid 10 million); UMS was debt free again (no finance lease obligation either), with cash pile of 27.406 million.
7) The 15.1 million loan had been paid off over a period of 18 months or 6 quarters. This works out to be 2.9 cents per share per year - which was significant.
8) The cash hoard of SGD 27.406 million (7.9 cents per share) was the cash balance at the end of 2Q2013. The sum should include the 1Q2013 dividend of 1 cent (paid on 26-July-2013) and 2Q2013 dividend of 1 cent (to be paid on 26-Oct-2013).
9) This must be an enviable position to be in. At half-time (1H2013), UMS had already earned enough cash (7.9 cents per share) to cover a dividend payout of 5 cents per share for FY2013. UMS could afford to make a dividend payout of 6 cents (or even 7 cents), if it chooses to - unless it ends up making losses in 2H2013.
10) In 2H2013, unless the expected “breather” turns quickly into “full blown recession”, one would still expect UMS to maintain its ability in generating positive FCF – hence, cash hoard would continue to grow in 2H2013.
11) Over the period of 6 quarters (from 1Q2012 to 2Q2013) UMS managed to simultaneously support an equivalent yearly DPS of 5 cents + an equivalent loan repayment of 2.9 cents per share per year, which add up to 7.9 cents per share per year - this was impressive!
12) In short, there is scope to raise dividend, IMO.
13) It looks like DPS of 5 cents should not be a problem for FY2013. If the expected "breather" turned out to be "short and swift " in 2H2013, then we are likely to be in for a DPS of 6 cents. We should be able to get a better feel after the 3Q2013 results announcement. Let's wait.

(vested)

[Boon]

Trends in Semiconductor Equipment Industry - August 2013 Update
Posted on Mon, Aug 05, 2013
By Dave Faulkner
Executive VP, Sales and Marketing, Cimetrix

http://info.cimetrix.com/blog/bid/99762/...013-Update

“We are seeing equipment suppliers being a bit cautious about Q3 of this year. Several companies are offering guidance of no growth this quarter.”

“Breather”?

“No growth”? Another cautious outlook statement for 3Q2013.

(Vested)

[Boon]

Applied Materials 3Q2013 result (ending July 28) missed analysts' expectation as demand fell from the company's foundry customers (seasonal factor). – expects demand to recover in 4Q - optimism remains high – business outlook remains good.

Revenue down 1.5% QoQ
New order down 22.4% QoQ

SSG : Revenue (USD million):
1Q2012 = 1,344
2Q2012 = 1,777
3Q2012 = 1,545
4Q2012 = 870
1Q2013 = 969
2Q2013 = 1,291
3Q2013 = 1,272 (This is 1.5% lower than 2Q2013)

SSG : New Orders (USD million)
1Q2012 = 1,418
2Q2012 = 1,969
3Q2012 = 1,166
4Q2012 = 741
1Q2013 = 1,363
2Q2013 = 1,551
3Q2013 = 1,203 (This is 22.4 % lower than 2Q2013) - seasonally decline in foundry demand

SSG : Backlog (USD million)
1Q2012 = 1,056
2Q2012 = 1,208
3Q2012 = 855
4Q2012 = 704
1Q2013 = 1,071
2Q2013 = 1,265
3Q2013 = 1,173 (This is 7.3% lower than 2Q2013)

Key points from results briefing:
1) Mobility is the major driver in electronics. As the mobility build-out gathers pace device makers are engaged in a battle for leadership - all our customers want to be the first to introduce new technology that will help them win. Consumers are making buying decisions based on battery life, features, form factor and visual experience which mean that our customers’ ability to deliver winning products requires new device technology at the right yield and cost. Performance improvements in mobile chips and displays are becoming increasingly dependent on materials innovation. Applied is uniquely positioned to enable next generation transistors and interconnects 3D memory and high resolution, low powered displays. Applied capabilities in Precision Materials Engineering are strategically important for our customers. And this has resulted in employing us into much earlier and deeper engagements. Today, our customer relationships have never been better. And this combined with our strong pipeline of new products is providing us with significant opportunities to grow market share as new transistor, interconnect, memory and display technologies are adopted.
2) Through the third year in a row seasonal buying patterns are evident as consumers wait for new smartphone and tablet models to be released in the fall, as a result we’re seeing a near term slowdown in investment by our foundry customers as they focus on ramping new capacity installed over the past two quarters. This will deliver product for the holiday season and readying their next generation of technology. We expect investment levels to recover in the fourth calendar quarter.
3) Growth of mobile devices is also driving healthy demand for NAND flash memory and bit (ph) growth for 2013 is expected to be in the 40% to 50% range. The transition of 3D NAND technology into production is underway and we expect investment to accelerate in 2014 and 2015 as more manufacturers adopt this technology.
4) In the DRAM market conditions are improving with average selling prices recovering to levels last seen in 2010 as a result of increasing bit (ph) demand for mobile applications combined with structural changes in the market and several years of underinvestment, customers are taking actions to increase bit supply. Today, these investments are primarily focused on technology conversions for the 3X to 2X node. We expect some new capacity will be added if these favorable market conditions continue into 2014. While mobility related demand remains strong, PC sales are still challenged and consequently, we are seeing some minor reductions in logic investment for the year.
5) Looking at industry investment as a whole, while there has been spending mix shifts towards memory in the second half of the year we are maintaining our 2013 wafer fab equipment forecast of $27 billion to $30 billion. We believe that wafer fab equipment investment will be higher in 2014, up 10% to 20% relative to this year. This will be driven primarily by the foundries building out there 20-nanometer node, investment in 3D NAND capacity, and some increase in DRAM spending. This is the spending mix that is favorable for Applied Materials.
6) In summary, the market environment in both semiconductor and display provides a firm foundation for profitable growth. At the same time, major industry trends are playing to Applied Materials strength in Precision Materials Engineering presenting us with an unprecedented number of opportunities. 2013 is shaping up to be a year, where we are building momentum for profitable growth for 2014 and beyond.

Applied Materials' CEO Discusses F3Q 2013 Results - Earnings Call Transcript
Aug 15 2013, 19:23 | about: AMAT
http://seekingalpha.com/article/1639732-...art=single
(vested)