The interim dividend sustains. If annual dividend of 5 cents per share will sustain, and sell the stock at 50 cents per share at the end of the 5 years, a fair valuation with discount rate of 8%, is around 60 cents per share.
The valuation of the company, should be higher, with 5-year average Free Cash Flow (FCF) of about 6.5 cents per share, and the likelihood of 6 cents, instead of 5 cents annual dividend per share. Furthermore, we might be able to sell at a higher price at the end of the 5 years.
What do you think?
(vested)
(03-08-2015, 09:54 PM)CityFarmer Wrote: [ -> ]The interim dividend sustains. If annual dividend of 5 cents per share will sustain, and sell the stock at 50 cents per share at the end of the 5 years, a fair valuation with discount rate of 8%, is around 60 cents per share.
The valuation of the company, should be higher, with 5-year average Free Cash Flow (FCF) of about 6.5 cents per share, and the likelihood of 6 cents, instead of 5 cents annual dividend per share. Furthermore, we might be able to sell at a higher price at the end of the 5 years.
What do you think?
(vested)
There are a few risk factors that had been highlighted in the past that explains the cheap valuation we are seeing in UMS.
1) Major customer AMAT accounting for more than 85% of total revenue. This is a huge risk that is a very big concern. AMAT cashing out of its stake is already a red light.
2) Semicon industry is very cyclical and having peaked in 2014, the next upturn might not happen until about 3 years later.
3) Lack of earnings growth potential. UMS has not been able to expand its revenue base beyond AMAT. It can only be viewed as a pure yield stock, until it can show that it can expand its customer base.
Just to supplement point number 2 in my previous posting.
BoFA Merrill Lynch cut ASM PACIFIC (00522.HK) 's 2015-2016 EPS forecast by 36%/11% and trimmed its target price from $100 to $82.21 due to the prolonged demand and inventory correction arising from delaying capacity expansion by semi and EMS customers. Investors are concerned that there is a sluggish growth for semiconductors in the next 12 months. However, the research house believed that the recent share price correction provides a good buying opportunity given ASM PACIFIC's impressive structural trends. The rating was maintained at Buy.
~
AAStocks Financial News
Web Site:
www.aastocks.com
(03-08-2015, 11:40 PM)Tiggerbee Wrote: [ -> ]Just to supplement point number 2 in my previous posting.
BoFA Merrill Lynch cut ASM PACIFIC (00522.HK) 's 2015-2016 EPS forecast by 36%/11% and trimmed its target price from $100 to $82.21 due to the prolonged demand and inventory correction arising from delaying capacity expansion by semi and EMS customers. Investors are concerned that there is a sluggish growth for semiconductors in the next 12 months. However, the research house believed that the recent share price correction provides a good buying opportunity given ASM PACIFIC's impressive structural trends. The rating was maintained at Buy.
~
AAStocks Financial News
Web Site: www.aastocks.com
It seems a lot of Japanese fab have been closing down the past few years and new capacity like that from samsung is taking over the slack, hence not much overcapacity and oversupply yet..
Demand seems to be sideways too with the limping global economy. And though demand could dip if big economies drop, mobile phones and pads are becoming if not already an everyday essential. There is also support and growth from the electronics/auto/alternative energy/industrial sectors.
IMHO semicon should be doing ok with not much fluctuation over next few years barring any BIG shocks to global economy.
ok off to buy some Samsung Pro MicroSDs for my pad and phone.
-v-
The malaysian ringgit has lost 17% since the beginning of the year, any idea how to quantify the positive impact for UMS which sell its products in USD but productions costs in MYR ?
(14-08-2015, 11:45 AM)noah2013 Wrote: [ -> ]The malaysian ringgit has lost 17% since the beginning of the year, any idea how to quantify the positive impact for UMS which sell its products in USD but productions costs in MYR ?
I reckon the impact should be insignificant, since M'sia operation carries only a smaller part of operation.
Based on last AR (2014), M'sia, together with others, carried about 25% of revenue. The main operation still in Singapore.
(vested)
(14-08-2015, 03:06 PM)CityFarmer Wrote: [ -> ] (14-08-2015, 11:45 AM)noah2013 Wrote: [ -> ]The malaysian ringgit has lost 17% since the beginning of the year, any idea how to quantify the positive impact for UMS which sell its products in USD but productions costs in MYR ?
I reckon the impact should be insignificant, since M'sia operation carries only a smaller part of operation.
Based on last AR (2014), M'sia, together with others, carried about 25% of revenue. The main operation still in Singapore.
(vested)
That is from the revenue point of view. From the profit point of view, I think the net result is positive. UMS has 50+% revenue from Singapore and 20% in USA, while most of the cost have been moved to Penang. So the profitability for the US and Singapore part will increase. Congrats to all those vested!!
I am playing catch up…………………..ha-ha!
2Q2015 Results:
Revenue (SGD million):
1Q2014 = 34.309
2Q2014 = 28.689 (1H2014 = 62.998)
3Q2014 = 24.771
4Q2014 = 22.050 (2H2014 = 46.821)
1Q2015 = 27.467
2Q2015 = 31.043 (1H2015 = 58.510)
NPAT (SGD million):
1Q2014 = 8.558
2Q2014 = 7.229 (1H2014 = 15.787)
3Q2014 = 6,465
4Q2014 = 3.677 (2H2014 = 10.142)
1Q2015 = 7.541
2Q2015 = 8.266 (1H2015 = 15.807)
Gross Profit Margin :
1Q2014 = 53%
2Q2014 = 57%
3Q2014 = 54%
4Q2014 = 54%
1Q2015 = 57%
2Q2015 = 57%
Net Profit Margin :
1Q2014 = 24.9%
2Q2014 = 25.2%
3Q2014 = 22.1%
4Q2014 = 16.7%
1Q2015 = 27.5%
2Q2015 = 26.6%
FCF Generated (SGD million):
1Q2014 = 10.3
2Q2014 = 3.9 (1H2014 = 14.2)
3Q2014 = 5.7
4Q2014 = 9.0 (2H2014 = 14.7)
1Q2015 = 6.4
2Q2015 = 12.6 (1H2015 = 19.0)
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)
Comments:
1) 2Q2015 revenue of SGD 31.043 m was better than 2Q2014 and it was also better than the previous four quarters (2Q2014 to 1Q2015). I would consider quarterly revenue of above SGD 30 m to be good numbers. On half-yearly basis, 1H2015 revenue was not as good if compared to 1H2014 but it was much better than 2H2014.
2) NPAT, GPM, NPM and FCF generated in 1H2015 were better than that in 1H2014 and 2H2014.
3) Ability to generate FCF is intact => FCF of SGD 4.4 cents was generated in 1H2015.
4) To maintain DPS of SGD 6.0 cents for FY2015, UMS needs only to generate FCF of another SGD 1.6 cents per share (SGD 6.9 million) in 2H2015.
5) As at 30th June 2015, cash hoard of UMS stands at SGD 39.607 million with no bank borrowing (equivalent to SGD 9.2 cents cash per share – this is more than enough to cover DPS of 6.0 cents for FY2015 – without having taken 2H2015 earning contribution into consideration)
6) “The Group’s major customer had previously stated that the current year’s trend is unique with more business activities in the second half of the year.”
7) Overall, a good set of results, I reckon. If 2H2015 turns out to be stronger than 1H2015 as envisaged by the management, it would be highly likely that UMS could easily generate FCF in excess of SGD 6.0 cents per share for FY2015 – and possibly exceeding SGD 7.0 cents per share………………………… will see.......
AMAT reported results for its third quarter ended July 26, 2015.
Revenue/New Orders/Backlog for SSG improved.............
Record quarterly orders for SSG – consistent with UMS management guidance for a better 2H2015.
SSG : Revenue (USD million):
1Q2014 = 1,484
2Q2014 = 1,584
3Q2014 = 1,476
4Q2014 = 1,434
1Q2015 = 1,446
2Q2015 = 1,560
3Q2015 = 1.635 ( Up 5.0% )
SSG : New Orders (USD million)
1Q2014 = 1,569
2Q2014 = 1,664
3Q2014 = 1,565
4Q2014 = 1,334
1Q2015 = 1,426
2Q2015 = 1,704
3Q2015 = 2,007 (UP 18% compared to 2Q2015) – record SSG orders
SSG : Backlog (USD million)
1Q2014 = 1,366
2Q2014 = 1,452
3Q2014 = 1,515
4Q2014 = 1,401
1Q2015 = 1,362
2Q2015 = 1,473
3Q2015 = 1,767 (Up 20% compared to 2Q2015)