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(25-01-2023, 10:29 PM)dreamybear Wrote: The company reported a good set of financial results, a healthy cash holding and has mentioned a robust outlook. In that sense, wouldn't keeping the treasury shares, rather than selling them be better for shareholders ? If we view share buybacks as the mgmt feeling the shares are undervalued, would selling treasury shares signal the opposite ?
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NOTICE OF SALE AND USE OF TREASURY SHARES
https://links.sgx.com/FileOpen/UMS%20-%2...eID=744753
Third Quarter Financial Statement And Dividend Announcement
https://links.sgx.com/FileOpen/UMS%20-%2...eID=738429
hi dreamybear,
Share buyback is generally a capital allocation decision. Hence share sellback is similarly a capital allocation decision too.
As the saying goes, there are many reasons for selling and so it is not easy to "guess" why they are selling their treasury shares. But if one were to stick to the capital allocation mental framework, my guess is that Mgt believes the capital (ie. cash used to buy the treasury shares) is better utilized for reinvesting in the business or distributing them as future dividends.
I am not a certified financial advisor and so nothing of what I say should be construed as financial advice. Please consult a certified financial advisor for advice instead.
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03-10-2025, 09:16 AM
(This post was last modified: 03-10-2025, 09:17 AM by weijian.)
In recent years, AMAT has been reducing its reliance on UMS, as its subcontracting spend has reduced from almost 100% in the 2010s to ~50%. Frencken has picked up the slack from this reduced spend. However, UMS has also slowly diversify itself off AMAT as it picked up LAM Research as its customer, dedicating the entire new Penang facility for them.
In general, a lot of subcontracting firms (especially in Msia) have gotten a huge tailwind lift from the prosperity of their principal customer + RM depreciation. But this also increased their customer concentration (and hence risk level). If their principal customer will continue to prosper, it may actually be better to invest in the principal customer rather than their principal subcontractor, as the latter comes with customer concentration risk.
Applied Materials warns of sales hit from latest curbs on China
Applied Materials and its peers have faced increasingly strict rules governing their ability to supply and support customers in China. It’s part of a push in Washington to limit the Asian nation’s ability to develop a domestic chip supply. Successive administrations have cited national security concerns for the moves and tried to get other governments to place similar curbs on Applied Materials’ overseas competitors.
https://www.businesstimes.com.sg/compani...urbs-china
I am not a certified financial advisor and so nothing of what I say should be construed as financial advice. Please consult a certified financial advisor for advice instead.
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