At S$1.01, Is UMS Integration Limited (SGX:558) Worth Looking At Closely?

As of January 14, 2025, UMS Integration Limited (SGX:558) is trading at S$1.01, down 22.31% from its 52-week high. But is this semiconductor equipment and services provider worth a closer look at its current price? Let's dive into the company's financial performance, strategic initiatives, and market outlook to find out.



Financial Performance

UMS Integration Limited reported a net profit of S$61.2 million for the financial year ended December 31, 2023, a 40% decline from the previous year. Revenue fell 19% to S$299.9 million, with the Semiconductor segment and Others segment decreasing 19% and 51% respectively. However, free cash flow grew to S$51.1 million from $39.6 million in FY2022.

Strategic Initiatives

The company's strategic priorities include developing manufacturing capabilities and capacities to help solve customers' product delivery challenges and expanding its market opportunities in the semiconductor and other complex equipment industries. UMS Integration Limited is investing heavily in its production capacities to be "delivery-ready" to meet any surge in customer demand. The Group's new 300,000 square feet production facility at Penang Science Park North is successfully completed and is expected to commence volume production from March 2024, which may lead to an uptick in order flow in the coming months.

Market Outlook

While the global semiconductor sector could see some near-term softness due to surplus inventories issues, the overall longer-term prospects look brighter. According to SEMI, semiconductor manufacturing equipment growth is expected to resume in 2024, with sales forecast to reach a new high of $124 billion in 2025, supported by both the front-end and back-end segments. Global semiconductor capacity is expected to increase 6.4% in 2024 to top the 30 million wafers per month (wpm) mark for the first time.

Conclusion

At S$1.01, UMS Integration Limited (SGX:558) may be worth looking at closely, given its strategic initiatives and the positive long-term outlook for the semiconductor industry. However, investors should consider the company's recent financial performance and the cyclical nature of the semiconductor market. As always, it's essential to conduct thorough research and consider your risk tolerance before making any investment decisions.