UMS Holdings

[weijian]

The 1H17 press release itself is pretty colorful to start with ("underline" from me). Don't really appreciate the fact that a "bonus share" issue + the regular 1ct/share cash can be considered "bumper rewards"

UMS HOLDINGS’ HALF-YEAR NET PROFIT MORE THAN DOUBLED TO REACH S$22.6 MILLION

- Proposes a special one-for-four bonus share issue and a 1 cent tax exempt interim dividend to reward shareholders

Singapore, Aug 11 2017 – Shareholders of SGX Mainboard-listed UMS Holdings Limited (“UMS” or “The Group”) can look forward to bumper rewards as the Group is proposing a special bonus issue of up to 107,285,986 new ordinary shares of the Company on the basis of one Bonus Share for every four existing ordinary shares as well as a one cent tax-exempt interim dividend after delivering another stellar financial performance in 2Q2017. Net profit attributable to shareholders has risen to S$22.6 million on the back of a 92% increase in turnover to S$84.5 million in 1H2017– on par with the Group’s full year net profit in FY2016.

Net profit attributable to shareholders in 2Q2017 shot up by 77% to S$11.5 million from S$6.5 million in 2Q2016. The sterling performance reflected the robust growth of the Group's semiconductor
business.

1H17 PR: http://infopub.sgx.com/FileOpen/UMS_2Q20...eID=466536

[Bibi]

Probably they will maintain the same dividends despite the increase in shares after the bonus issue. The last bonus issued they did, the dividend was maintained. Assuming final profit is $38mil, 6 cts dividend will be ~85% of eps.

[Boon]

1Q2017  Results: (Released on 11-Aug-2017)
 
Revenue (SGD million):
1Q2014 = 34.309
2Q2014 = 28.689   
3Q2014 = 24.771  
4Q2014 = 22.050   
1Q2015 = 27.467
2Q2015 = 31.043   
3Q2015 = 30.696  
4Q2015 = 21.884
1Q2016 = 20.362
2Q2016 = 23.607 
3Q2016 = 26.082
4Q2016 = 34.153 (FY2016 = 104.204)
1Q2017 = 41.760 
2Q2017 = 42.734  (+ 81% vs 2Q2016 ; + 2% vs 1Q2017) ; 1H2017 = 84.494   

NPAT (SGD million):
1Q2014 = 8.558
2Q2014 = 7.229    
3Q2014 = 6,465   
4Q2014 = 3.677    
1Q2015 = 7.541
2Q2015 = 8.266    
3Q2015 = 8.531  
4Q2015 = 9.961
1Q2016 = 3.380
2Q2016 = 6.469  
3Q2016 = 6.785
4Q2016 = 5.957     (FY2016 = 22.591)
1Q2017 = 11.168 
2Q2017= 11.482   (+77% vs 2Q2016 ; + 3% vs 1Q2017) ; 1H2017 = 22.461

EPS ( SGD Cent ):
1Q2014 = 2.00 (adjusted for bonus issue)
2Q2014 = 1.68    
3Q2014 = 1.27   
4Q2014 = 0.86    
1Q2015 = 1.76
2Q2015 = 1.93    
3Q2015 = 1.99  
4Q2015 = 2.32
1Q2016 = 0.79
2Q2016 = 1.51  
3Q2016 = 1.58
4Q2016 = 1.39     (FY2016= 5.26)
1Q2017 = 2.60
2Q2017=  2.68      ; 1H2017 = 5.28

Gross Profit Margin (GPM):
1Q2014 = 53%
2Q2014 = 57%
3Q2014 = 54%
4Q2014 = 54%
1Q2015 = 57%
2Q2015 = 57%
3Q2015 = 55%
4Q2015 = 76%
1Q2016 = 60%
2Q2016 = 58%
3Q2016 = 57%
4Q2016 = 46%
1Q2017 = 51%
2Q2017= 51%
1H2017= 51%
 
Net Profit Margin (NPM):
1Q2014 = 24.9%
2Q2014 = 25.2%
3Q2014 = 22.1%
4Q2014 = 16.7%
1Q2015 = 27.5%
2Q2015 = 26.6%
3Q2015 = 27.8%
4Q2015 = 45.5%
1Q2016 = 16.6%
2Q2016 = 27.4%
3Q2016 = 26.0%
4Q2016 = 17.4%
1Q2017 = 26.7%
2Q2017=  26.8%
 
FCF Generated (SGD million):
1Q2014 = 10.3
2Q2014 =  3.9    
3Q2014 =  5.7   
4Q2014 =  9.0   
1Q2015 =  6.4
2Q2015 = 12.6    
3Q2015 =  3.5  
4Q2015 =  8.8
1Q2016 =  5.0
2Q2016 =  5.2    
3Q2016 =  9.0
4Q2016 = 12.0  (FY2016 = 31.2)
1Q2017 =  6.8
2Q2017= 10.3   (1H2016 = 17.10)

Cash & Cash Equivalent (SGD million)
1Q2014 = 39.511
2Q2014 = 36.113 (debt = 5.000) ; Net Cash = 31.113
3Q2014 = 32.947
4Q2014 = 33.792
1Q2015 = 40.801
2Q2015 = 39.607 (no bank borrowing)
3Q2015 = 38.255 (no bank borrowing)
4Q2015 = 38.933 (no bank borrowing)
1Q2016 = 42.780 (no bank borrowing)
2Q2016 = 35.399 (debt = 1.249)
3Q2016 = 39.217 (debt = 0.249)
4Q2016 = 42.620 (debt = 0.249)
1Q2017 = 48.052 (debt = 0.249)    
 2Q2017= 62.954 (debt = 18.904) => net debt = 44.050
 
DPS ( SGD Cent ):
1Q2014 = 1.00
2Q2014 = 1.00   
3Q2014 = 1.00   
4Q2014 = 3.00    (FY2014 = 6.00)
1Q2015 = 1.00
2Q2015 = 1.00    
3Q2015 = 1.00
4Q2015 = 3.00    (FY2015 = 6.00)
1Q2016 = 1.00
2Q2016 = 1.00
3Q2016 = 1.00
4Q2016 = 3.00   (FY2016 = 6.00)
1Q2017 = 1.00
2Q2017=  1.00
 
Comments:
1) Overall, an impressive set of results.
2) Robust growth in the semiconductor business segment of the group boosted 2Q2017 revenue/NPAT/EPS to a new quarterly records level.
3) 1H2017 NPAT/EPS ~  FY2016 NPAT/EPS.
4) However, 1H2017 FCF generated is only ~ 55% of FY2016 FCF, not quite in line with revenue and earnings growth.
5) While the Group's prospects remain positive, the Group expects its major customer’s demand moderating in the second half of the year. The new terms of its renewed system integration contract announced earlier this year, which will have a lower average selling price, will also take effect in the near future.
6) Kalf Engineering’s contributions are not expected to be significant for FY2017 due to some project delays.
7) Proposes a special one-for-four bonus share issue and a 1 cent tax- exempt interim dividend to reward shareholders
8) AMAT has made a “margin squeeze” on UMS. How big an impact would that have on UMS’s top/bottom lines and cash flows, going forward, remains to be seen !

[valuebuddies]

What's the reason of the sell down? I thought the results was very good and the bonus issue is positive (from the past experience). Strangely I can't understand and tempted me to buy more =)

[Bibi]

What's the reason of the sell down? I thought the results was very good and the bonus issue is positive (from the past experience). Strangely I can't understand and tempted me to buy more =)

My guess:
1) year on year first quarter profit improvement of 200+% while second q improvement of only 75+%
2) CEO mention next 2 quarters will be slower.
3) PE ~12+ at $1.10. Not unreasonably high but higher than past few years average.

Not vested.

[Boon]

What's the reason of the sell down? I thought the results was very good and the bonus issue is positive (from the past experience). Strangely I can't understand and tempted me to buy more =)

My guess:
1) year on year first quarter profit improvement of 200+% while second q improvement of only 75+%
2) CEO mention next 2 quarters will be slower.
3) PE ~12+ at $1.10. Not unreasonably high but higher than past few years average.

Not vested.

positive => buoyant semiconductor equipment demand
negative => there is a margin squeeze on the renewed contract by AMAT => how big an impact? we don't know
neutral => contribution from new ventures is still insignificant.
 
Overall=> positive ? negative ? neutral ? especially from FCF perspective, only time will tell...................

[DCF]

There is a interview of the CEO on Straits Time that CEO commented that they will expand the Penang floor space by 3X to meet the demand. So next two quarters may be slower but long term outlook is bright enough for them to grow aggressively

[BlueKelah]

There is a interview of the CEO on Straits Time that CEO commented that they will expand the Penang floor space by 3X to meet the demand. So next two quarters may be slower but long term outlook is bright enough for them to grow aggressively

And just like UMS is planning to do floorspace expansion, Chinese are also doing a lot of investment into this sector. AMAT has been making a lot of money from high demand on Chinese side this past year as China gov is trying to get in on more of the action. Currently its good times for all in the semicon industry as prices have been going up and up and up for past year, but this might result in overcapacity in the near future, which is what drives the cycles in semicon industry.

AMAT just had another fantastic quarter.
http://www.nasdaq.com/article/applied-ma...0817-01005


IMHO we are seeing the peak this year as the rise for the past year has really been too fast and furious. Semicon companies are now trading at pretty high valuations as well.

Interesting article I came across.
http://www.semi.org/en/industry-upswing-end-cycles

Thing is whether one believes that semicon industry still has cycles? Will all this recent massive expansion cause oversupply in a couple years time causing a fast and painful down cycle like it has in the past?

[DCF]

This should drive a lot of demand for a while

http://www.foxbusiness.com/features/2017...ony-2.html

[egghead]

Andy and his FC bought some shares yesterday - not something he did in recent years.