This time, Tng is more optimistic about UMS, given that it still managed to report a higher set of numbers for the 1HFY2025 ended June 30, despite geopolitical tensions and market uncertainties from the US trade tariffs.
During the period, UMS’s revenue rose by 14% y-o-y to $125 million due to better semiconductor and aerospace sales. Accordingly, the company’s net profit increased by 5% y-o-y to $20.1 million. On a q-o-q basis, UMS’s net profit was up by 4.4% to $10.3 million as revenue grew by 16.8%. The company declared a quarterly dividend per share (DPS) of 1 cent and was in a net cash position of $49.2 million as of the end of June.
“In its 1HFY2025 results press release, management highlighted that the strengthening of its production capabilities and facilities has sharpened its competitive edge in securing several new product introductions from its new key customer in Malaysia,” says Tng in his Aug 21 report.
“In management’s view, the group, with its new Penang facilities, should be a key beneficiary of the global chip sector rebound as well as the rising shift of global semiconductor supply chains to the region, especially Malaysia and Singapore — where its two key customers have committed to major expansion plans,” he adds.
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To this end, the analyst notes that UMS has a history of rewarding shareholders with bonus issues. At the results briefing, UMS’s management also seemed open to “assessing the merits of another bonus issue to further improve the trading liquidity of its shares”.
Tng’s new target price is based on an FY2027 P/E of 20.8 times, which is two standard deviations (s.d.) above UMS’s five-year average P/E from FY2021 to FY2025. “We believe that [UMS’s] FY2025 - FY2027 net profit growth of 11.1%-19.4% justifies this premium,” says Tng.
The company’s expected dividend yields of 3.7% over the FY2025 to FY2027 should also lend support to its share price.
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In addition, UMS’s secondary listing on the Bursa Malaysia should widen its potential pool of investors and help support improved valuations, Tng adds.
As at 9.04am, shares in UMS are trading 3 cents higher or 2.17% up at $1.41.
