The Edge Singapore has filtered and scored globally and domestically listed companies along the semiconductor value chain for this week’s issue. The Singapore‑listed stocks include AEM Holdings AWX , Frencken Group E28 , Grand Venture Technology JLB and UMS Holdings 558 .
Similar to previous issues, this scoring table is purely quantitative and considers six aspects of the company. The first is historical performance, which looks at the company’s historical financials over the past 10 years, where discounts are given for poor performance and inconsistency.
The second is profitability, which looks at profitability ratios such as return on equity, return on assets and margins. The third aspect is yields and valuation, which compares the company’s fundamental yields against the risk‑free rate, along with its relative valuation to peers.
The fourth aspect is financial safety, which examines the company’s balance sheet, comprising liquidity and solvency ratios; the quality of its shareholder equity; and any external credit rating on the company. The fifth is sentiment, which looks at analyst ratings and forward price ratios on the company.
Lastly, is the price-to-value aspect, which compares the price growth to the weighted value growth over multiple periods. This weighted value includes revenue, net income, and cash flows in ascending order.
From Table 1, the highest‑scoring company, and the only strongly undervalued company is Paris‑listed STMicroelectronics. STMicroelectronics designs develops, manufactures, and markets semiconductor integrated circuits and discrete devices. The company’s products are used globally, in the telecommunications, consumer electronics, automotive, computer, and industrial sectors.
See also: Unravelling the semiconductor supply chain
Further, domestically‑listed UMS Holdings also scored highly, making it undervalued among globally‑listed peers. UMS provides equipment manufacturing and engineering services to Original Equipment Manufacturers (OEMs) of semiconductors and related products. The company manufactures high‑precision components and complex electromechanical assembly and final‑testing services, supporting the electronics, machine tools and oil and gas industries.
Investors and readers keen on investing in the semiconductor‑themed sector should note that this scoring table is purely quantitative. They should also consider the qualitative aspects of the company for further examination.
See also: South Korea eyes US$10 bil in support for chipmakers in 2025
Separately, we have done a deeper quantitative analysis on Nvidia, one of the stocks that have done very well over recent periods in terms of shareholder returns. We have considered a few factors for our intrinsic valuation of the company. The first is the discounted cash flow (DCF) analysis, followed by the margin of safety analysis that examines items in the balance sheet of the company. Next is the divergence analysis, which is essentially the price‑to‑value analysis in the scoring table that compares the divergence between the growth in price and growth in the weighted value of the company.
The sensitivity analysis considers factors such as the sentiment and movement of the price post‑financial results and the beta while the comparables analysis looks at relative valuations such as current and forward trading multiples of peers and whether the company is trading at a premium or discount to these values. Chart 2 illustrates the valuation overview of Nvidia, where a range of prices are given for each valuation type and also the intrinsic valuation of the company that incorporates all the different types of valuations.
We think Nvidia is currently fairly valued — or slightly overvalued — at current valuations and prospects based on the most recent reported financials and prospects. Investors and readers should note that this valuation could change significantly as news and business updates can substantially tilt the price in either direction.
