As shared in an earlier post, I hope to see some green shoots for the latest quarter earnings from AEM Holdings (SGX: AWX), UMS Integration (Ltd) (SGX: 558) and Venture Corporation Limited (SGX: V03).
Specifically, I was expecting a flat or slightly improved quarter-on-quarter (QOQ) numbers, which would indicate that we are nearing the bottom of the cycle.
While the recent numbers aren’t entirely positive, I believe we’re on the right track. There are encouraging signs pointing towards a brighter outlook for the coming year.
Before we dive into the numbers from the three companies, I want to highlight another semiconductors related company Micro-Mechanics (Holdings) Ltd (SGX: 5DD) for its transparency in sharing results.
The simple tabular format might seem straightforward, but it offers a powerful tool for quick analysis. By juxtaposing two years of quarterly results, we can swiftly identify year-on-year (YOY) and QOQ performance trends.
Let’s examine the quarterly results of three companies in this format:
I know that presenting numerous figures on a single page can be overwhelming for you, but this offers a concise reference. I hope the colour-coding helps to visually differentiate the data.
Venture: A mixed bag with a silver lining
While I was initially disappointed with Venture’s results, this was due to their 1H 2024 guidance of a stronger 2H 2024.
Consequently, the investment community, including myself, was disheartened by the 3Q 2024 decline and the revised 2H 2024 outlook of relative stability compared to 1H 2024.
Despite the initial disappointment, there are positive signs emerging. The decline in numbers was relatively small, and the YOY decrease is steadily tapering off, offering some hope for a potential turnaround.
Additionally, Venture’s strong operational cash flow and robust balance sheet position it favourably to sustain its current annual dividend of S$0.75.
At the current price, this translates to an attractive yield of nearly 6%.
UMS: Signs of a turnaround
UMS numbers for this year is trending in the correct direction. Similar to Venture, the YOY decline in sales is decreasing.
Earnings is more sporadic though and I assume that has to do with the various expenses that the company incurred for its expansion.
It is encouraging to know that the group’s new key customer has requested UMS to ramp up production in the coming months.
Coupled with a stable performance from its other key customer Applied Materials, Inc (NASDAQ: AMAT), the outlook going into 2025 appears positive.
AEM: A new chapter begins under new leadership
AEM has endured a challenging two-year period marked by plummeting revenue and operational missteps that resulted in the company sinking into loss in FY2023.
Despite continued revenue declines this year, there’s a glimmer of hope on the horizon.
The commercialisation of of its expanded AMPS platform, which features both burn-in and system level test for AI/HPC applications, expected to drive growth and profitability from the next quarter.
With the recent upward revision of 2H guidance to approximately S$200 million, AEM is poised for a significant sales boost in the upcoming quarter.
Assuming a conservative net profit margin of 5%, this could potentially propel AEM back into profitability for the entire FY2024.
You could also sense a shift in strategy under new CEO Amy Leong. She’s bringing a different approach, reminiscent of US-listed companies, by openly discussing AEM’s addressable market.
I am cautiously optimistic of AEM’s recovery in the coming year.
Added more to my Venture and UMS positions
I took advantage of the recent 10% dip in Venture’s share price following its earnings announcement to increase my position.
Despite the short-term setback, I remain confident in Venture’s ability to sustain its dividend and deliver stronger performance in the future.
I also continued to add to my holdings in UMS, anticipating benefits from its ongoing expansion plan.
To partially fund these purchases, I trimmed my position in Mapletree Pan Asia Commercial Trust (SGX: N2IU), bringing my overall REIT allocation to just above 25%.
Related Articles
If you’re interested in exploring these semiconductor companies further, I recommend reading my recent posts as follows:
Semiconductor Recovery: 3 Singapore Stocks That May Raise Their Dividends
Investing Opportunities in Singapore Semiconductor Companies: A Return to UMS Holdings
AEM’s Sharp Decline: Why I am Holding on to My Shares
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