I will briefly update what I took away from two semiconductor-related companies’ AGM – AEM Holdings (SGX: AWX) and UMS Integration (SGX: 558).
Let’s start with AEM which held its meeting at The Singpost Auditorium.
Exciting time ahead for AEM
Having read the messages from Chairman Loke, CEO Amy, and CTO Samer in the annual report, their sharing and presentation at the meeting reiterated similar themes.
In essence, AEM has undergone significant evolution.
If AEM 1.0 is about the breakthrough and growth journey with their first major customer Intel Corp (NASDAQ: INTC), then AEM 2.0 is about its diversification and expansion journey.
Notably, this second phase began around five years ago with Samer’s appointment, as the team foresaw the necessity for innovative testing technology for advanced packaging.
However, the annual report couldn’t fully capture the palpable pride and sense of accomplishment the leadership expressed regarding the breakthrough AEM achieved last year with two new customers that are among the leading semiconductor companies.
As Loke said, AEM has gone from Lab to Fab.
It’s an exciting time as AEM continues to establish itself as the global leader in thermal management and high-parallel test automation.
A particularly compelling advancement is the potential use of thermal control at wafer level during testing. The move to the front end of the semiconductor industry will open up a significant opportunity.
What about the potential impact from tariffs?
Loke shared that in the short-term, the impact is minimal for AEM’s testing segment but a bit more for its contract manufacturing segment. However, if the trade war continues for a longer period, it might cool demand.
Going forward, they are focused on delivering values to their new customers, to ensure their trust and establish AEM as a reliable partner.
Shifting gears to UMS Integration, which held its meeting at the premise of JEP Precision Engineering.
Busy period at UMS
There is no doubt the venue at Seletar Aerospace Crescent is out of place. But fortunately for me, I stayed in the North-East region, so it’s less than a 15-minute drive. To cater to shareholders who don’t drive, the company provided a free bus transfer from Seng Kang MRT station.
CEO Andy shared that the decision for not holding AGM at a hotel, helps save cost and, in his opinion, the food isn’t good. Indeed, we were treated to ample food at the end of the meeting, that consisted of buffet and barbecued local delights such as satays and otah.
Being in a competitive industry, cost is a factor that the group is conscious of.
This is one of the reasons given by the Group Financial Controller Stanley for the private placement of shares last year, instead of doing a rights issue. The other reason being the process is much faster.
That said, it’s also clear that they are not just out to contain cost. Andy shared that since the beginning, he made careful considerations on the business that UMS wants to have.
The company strategically focuses on niche products for front-end semiconductor equipment manufacturers.
These critical components demand exceptionally high precision and pose significant fabrication challenges, providing the company with a sustainable long-term value proposition.
In general, UMS adopts an approach of doing R&D and qualifying their customers’ products in Singapore, before mass producing in Malaysia.
With the group ramping up its production and working on several new product introductions from its new customers, it’s a busy period for the company.
Furthermore, not only is UMS not affected by the tariffs, it might even benefit from it. Andy elaborated that its (new?) customers are based in Malaysia, so there will not incur any tariff with the sales.
Moreover, they might be able to gain some new businesses, given that their parts could be cheaper than those manufactured in China.
Stanley also provided an update on the secondary listing in Bursa Malaysia (KLSE: Bursa).
UMS aims to complete the listing by June. He further explained that there will be no issuance of new shares but Andy will be releasing some of his shares.
Andy and Stanley opined that the listing might provide a better valuation for the company.
Despite being a more established company than many of its competitors, it is only valued at a price-to earnings (PE) ratio of around 15 times in Singapore Exchange (SGX: S68). This is a lot lower than the PE ratio of 30x that the competitors are getting in Bursa Malaysia.
I left both meetings feeling confident in the clear long-term directions and strategies articulated by the leaders of these two companies. While this clarity may not automatically translate to performance, I am sufficiently convinced to stay with them on this potentially uneven growth journey.
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