DBS Group Research has kept its “buy” call on engineering firm UMS with an unchanged target price of $1.70 after a record 1QFY2022.
UMS has also proposed an interim dividend of 1.0 cent per share as a thank you to its shareholders.
During the quarter, the group reported earnings of $19.4 million, making this a record for the group.
The figure represents a growth of 26% from earnings of $15.4 million in the corresponding period a year ago.
Accordingly, earnings per share (EPS) for the quarter hit a high of 2.91 cents from the 2.30 cents posted in the year before.
Net profit increased by 37% y-o-y to $20.7 million, its highest ever quarterly net profit.
Revenue for the 1QFY2022 surged 71% y-o-y to $84.7 million as revenue across its segments surged.
The semiconductor segment increased by 57% y-o-y to $73.3 million mainly due to the sustained increase in semiconductor demand. The higher sales were driven by growth in the group’s integrated system and component sales.
The aerospace segment logged revenue of $3.0 million, its first, on the back of the consolidation of sales from JEP Holdings, which became a subsidiary of the group from the 2QFY2021.
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Finally, other segments surged 193% y-o-y to $8.4 million due to contributions from UMS’s materials distribution subsidiary, Starke Singapore. The higher revenue was also attributable to UMS’ss water disinfection subsidiary Kalf Engineering as well as JEP Industrades' tooling distribution business.
By geographical regions, all of UMS’s markets logged y-o-y increases except Taiwan, which fell 12% y-o-y.
The slip in sales in Taiwan were due to lower sales of component spares because of supply chain constraints which caused material supply shortages in the industry.
In other markets, sales in Malaysia leapt by 240% y-o-y driven by higher material distribution sales and consolidation of JEP's tooling distribution revenue. In Singapore, sales grew by 75% y-o-y due to higher sales for UMS’s semiconductor integrated systems, increased components for new equipment as well as consolidation of JEP's Semiconductor component business.
Despite the higher expenses and material costs, the group’s gross material margin dipped slightly to 51.4%, compared to the 53.1% in the same quarter the year before.
As at end-March, cash and cash equivalents stood at $72.1 million.
"We are delighted to achieve another record-breaking profitable performance - surpassing $20 million in quarterly profit for the first time. The group's growth trajectory remains strong as we remain a beneficiary of accelerating capex demand from global wafer fabs,” says Andy Luong, chairman and CEO of UMS.
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“We have also benefitted from the group’s timely diversification and acquisition of JEP as well as the effectiveness of our team to manage the production challenges brought about by the Covid-19 pandemic and the global geopolitical tensions,” he adds.
According to the DBS team in its May 10 note, UMS’s growth trajectory remains strong as it’s still a beneficiary accelerating capex demand from global wafer fabs.
Its increasing capacity with its new plant in Penang by end-2022 will also ride on the growing demand, say the analysts.
The team has kept its earnings forecasts unchanged for now.
Shares in UMS closed 8 cents higher or 7.02% up at $1.22 on May 11.
