UMS Holdings

[CityFarmer]

One prevailing doubt of UMS, is overly dependent on AMAT. That reminded me the lingering debate on concentrated vs broadly diversified portfolio. I reckon the key is on the quality of the bet(s). If one day, someone offers me a deal, a controlling stake, of a cash company, with price way below cash value. I will be very irrational to invest only a small part of my money with an excuse of diversification.   

To cut it short, the deal of UMS/AMAT is a strategic partnership. UMS got a good margin, and AMAT got good service tailored to its needs. It is a win-win. 

We need to bear in mind that, AMAT is a market leader with market cap close to $20 billion, founded 1967, while UMS is S$0.215 billion, incorporated in 2001. I would like to quote a comment from Mr. Ow in his recent interview on SSC shareholder concern, of its concentrated exposure to Japan NYK.

"I consider [NYK] a good counter-party because of their spread of activities. You say four out of six of our ships [are chartered to them]. I wish I could get 40 more [contracts] from them. It is not easy to get such contracts from a Japanese major like them. There's a long, long, queue"

I reckon, AMAT to UMS, is at similar situation as NYK to SSC.

(vested)