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Boon

I suspect the reason could be even more ordinary/"frivolous" like just had a grandchild, or husband and wife quarrel, some illness, etc.

My interpretation is based on the words "less demanding role".....

(06-03-2013, 11:45 PM)Boon Wrote: [ -> ]New Role:

- re-designated as Consultant in line with her intention to take on a less demanding role and focus her efforts on key account management

http://info.sgx.com/webcoranncatth.nsf/V...6003AE072/$file/UMS_Resignation.pdf?openelement

The key point is she is going to “focus her efforts on key account management”

The key words to me are in red ie. "Consultant" & "Less Demanding Role". From my understanding, the role of a Consultant is more of an advisory role ie. they won't be doing the driving, in this case, on account management. Someone else will have to be in charge of Account Management, with the Consultant freely available to provide advise / consultations, only when asked... perhaps something like our SM or ESM role...

IMO, this resignation cum redesignation, esp. the BOD one (I don't think it's very demanding to sit on BOD...) is likely an indication of a change in her life priorities either willingly or unwillingly. I wonder if it's got anything to do with the $50Mil+ they'd previously raised ~1yr back from selling shares & IMT? Perhaps, if it'd been invested, someone needs to spend a lot more time there tending to the investments (perhaps not going smoothly and need more cash flow or even expanding, as more selling of shares recently)? Especially if it's offshore, then not much time even for BOD meetings?? Or marriage on the rocks, like The Hour Glass case?

<Not Vested - Just talking nonsense to myself, as usual>

actually, this is just too much to me over such a short period of time, i throw in the towel, given that UMS has such good prospects, AM outlook and such attractive dividends yield and FCF, why is the CEO selling the shares like nobody business, this together with the fall in margin, and the sudden re-designation (Quite obvious there is no prior planning to this redesignation, and consultant who is already an insider? I also thought you need ppl outside the daily routine to be an effective consultant, seems like a work less, earn more arrangment, haha). I feel the designation rather negatively, doesn't seem to be a dynamic board.

Just my thoughts. Since I am already sitting on profits, I decide to take risk off the table and just wait.

Thanks to many buddies for their interesting thoughts – it is always good to see diversity of views.

With a string of “surprise announcement” over the past few days from the management, I think it is appropriate at this juncture to re-visit the potential downside risks associated with investing in UMS:

1) Semiconductor equipment industry is cyclical in nature.
2) Demand for semiconductor equipment products would be affected by deteriorating macro condition.
3) UMS is too dependent on Applied Materials for its revenue and profitability. Its profitability and hence ability to pay out good dividends would be severely affected if its strategic partnership with Applied Material is negatively affected.
4) Reliance on the commitment of key management executives – Andy Luong and his wife – in the running of the business.
5) Further shares sale by Andy Luong in the open market may cause share price to drop.
6) Others ?

As always, since each of us has different risk appetite and investment objective, please make your own judgment to act in your best interest.

(Remain Vested)

(07-03-2013, 09:20 AM)KopiKat Wrote: [ -> ]

(06-03-2013, 11:45 PM)Boon Wrote: [ -> ]New Role:

- re-designated as Consultant in line with her intention to take on a less demanding role and focus her efforts on key account management

http://info.sgx.com/webcoranncatth.nsf/V...6003AE072/$file/UMS_Resignation.pdf?openelement

The key point is she is going to “focus her efforts on key account management”

The key words to me are in red ie. "Consultant" & "Less Demanding Role". From my understanding, the role of a Consultant is more of an advisory role ie. they won't be doing the driving, in this case, on account management. Someone else will have to be in charge of Account Management, with the Consultant freely available to provide advise / consultations, only when asked... perhaps something like our SM or ESM role...

IMO, this resignation cum redesignation, esp. the BOD one (I don't think it's very demanding to sit on BOD...) is likely an indication of a change in her life priorities either willingly or unwillingly. I wonder if it's got anything to do with the $50Mil+ they'd previously raised ~1yr back from selling shares & IMT? Perhaps, if it'd been invested, someone needs to spend a lot more time there tending to the investments (perhaps not going smoothly and need more cash flow or even expanding, as more selling of shares recently)? Especially if it's offshore, then not much time even for BOD meetings?? Or marriage on the rocks, like The Hour Glass case?

<Not Vested - Just talking nonsense to myself, as usual>

Any possibility of the role change just being a move to comply with board composition requirements of revised code of corporate governance? I have yet to have a deeper look via annual report. Just a thought pls.

Andy Luong and his wife are deemed substantial shareholders of UMS. There used to be 3 executive (CEO-Andy Luong, COO – his wife, and a CFO) and 4 independent directors on the board. With the resignation of the COO, there are now 2 executive and 4 independent directors left. Luong with his wife did not have majority control over the board before, and are now having even less control.

I think the composition of the board or its compliance or whether Luong and his wife wanted to have a majority control over the board is not an issue here.

The role and responsibility as a member of the BOD is totally different to that of key account management – each requires a certain amount of time commitment.

Whether the functioning of the Board would be affected without her? It is debatable but I doubt it.

If she does not have to spend time on BOD, she would have more time for her newly designated Consultant role in key account management, - and more free time for herself including “other business pursuit” if it is the case.
,
I still hope that UMS could spend more effort and time in looking for more new business and be less dependent on Applied Materials. But if such effort and time spent were at the expense of jeopardizing current relationship with Applied Materials, then I would rather they don’t do it. I am not suggesting that this had happened.

Luong and his wife still have a big stake in the company, around 28%, even though it has been reduced. With the improved outlook in the semiconductor equipment industry, if UMS's strategic partnership with Applied Materials could be maintained - if not strengthened, there are still lots of profit left to be made down the road. They may have other “business interests” elsewhere as most business people do, I still believe they know where priority lies, and could “juggle” them well.

(vested)

PE below 10x. MV $0.445. BV $0.53. Still attractive with buffer.

Assuming the quarterly dividend of $0.01 continues, this counter offers an attractive yield.

The following two documents dated back to 2003 contain some historical facts on UMS

http://www.nracapital.com/factsheet/IR_n...netAnn.pdf

http://www1.lts.com.sg/research%20report...D001895C7/$file/norelco.pdf?openElement

Key takeaways - with my thoughts in brackets. .
1) UMS Semiconductor Pte Ltd, a privately owned company was “acquired by Norelco Cetreline Holdings, a SGX listed company in which Singtel ex-Chairman, Koh Boon Hwee, was a board member and had a stake in. ( This was how UMS got listed and it is interesting to note that Koh Boon Hwee had a role in it)
2) Applied Materials was already a key customer of UMS Semiconductor Pte Ltd back in 2002. (This was much earlier than I thought)
3) In 2002, Applied Material was granted a call option by the shareholders of UMS Semiconductor Pte Ltd to take a stake in UMS – this call option was substituted with a “Replacement Option” in 2003 under the Norelco- UMS “M&A” deal. (This was how Applied Materials got its 6% stake in UMS)
4) RATIONALE for Norelco in acquiring UMS Semiconductor Pte Ltd : “In the opinion of the Company, the Acquisition will significantly accelerate the development of its technical capabilities and its penetration of the front-end semiconductor equipment industry. In addition, the Company believes that the Acquisition would also significantly increase shareholder value as it moves up the value chain, raising barriers to entry and bringing with it top-tier volume customers. This Acquisition would also speed up considerably the Company's effort in penetrating the front-end semiconductor equipment space - in particular, UMS has a distinct expertise in flexible manufacturing systems, cleanroom assembly and a technological edge in terms of high-end special processes which were co-developed with its major customers. The Company believes………………………………” (UMS was deemed by Norelco to have “distinct expertise” in flexible manufacturing systems, cleanroom assembly and a technological edge in terms of high-end special processes which were “co-developed” with its major customers .- the word “co-developed” could possibly implies sharing of intellectual property ownership. If this was the case, it would be a lot harder for Applied Materials to terminate its relationship with UMS, if those intellectual property "co-developed and co-owned" is still of significant value to Applied Materials).

That was about 10 years ago. How robust is the UMS/Applied Materials partnership today after 10 long years? I wish I know the answer !

On separate notes:

Applied Materials had announced a 11% increase in its quarterly cash dividend payout.

"This dividend increase reflects the confidence we have in our ability to deliver strong cash flow performance and our ongoing commitment to return capital to our stockholders," said Mike Splinter, chairman and chief executive officer.”

http://www.appliedmaterials.com/newsroom...h-dividend

Also, Applied Materials has recently been named by Ethisphere Institute, the leading business ethics think-tank, as one of the 2013 World's Most Ethical Companies.

http://www.appliedmaterials.com/newsroom...anies-list

(Vested)

Thanks for digging up the ancient history Boon. I long suspected a deep story behind UMS and AMAT since they were prominently mentioned during the RTO. Didn't realize it boiled down to the fact they co-developed some processes - explains the higher margins.

On another note, UMS will pay the 4Q dividend on 29 May 2013 - http://info.sgx.com/webcorannc.nsf/Annou...endocument

(Vested)

(20-03-2013, 12:20 AM)Nick Wrote: [ -> ]Thanks for digging up the ancient history Boon. I long suspected a deep story behind UMS and AMAT since they were prominently mentioned during the RTO. Didn't realize it boiled down to the fact they co-developed some processes - explains the higher margins.

On another note, UMS will pay the 4Q dividend on 29 May 2013 - http://info.sgx.com/webcorannc.nsf/Annou...endocument

(Vested)

Yes. The $0.02 dividend is payable to its shareholders.

I wonder if it is able to clinch more orders in the US as US recovers and increases its manufacturing. This will impact its EPS.

(Vested)