UMS Integration (Ltd) (SGX: 558) released its FY 2024 results last Friday, revealing a year of expected declines due to the broader semiconductor industry slowdown. Revenue declined year-on-year (YOY) by 19% to S$242 million, while net profit plunged by 32% to S$41 million.
Despite this, the company’s recent performance and strategic initiatives offer reasons for optimism heading into FY 2025.
Growth Momentum
As shown in the above table, both revenue and net profit have shown consistent quarter-on-quarter growth, suggesting an upward trajectory.
This isn’t merely a theoretical projection.
On the ground, UMS has commenced volume production for its new key customer, with strong order flow driving the production ramp-up.
Furthermore, the company is actively collaborating with this customer to introduce new products in the coming months, signalling a deepening partnership and sustained demand.
Beyond this new customer, UMS’s established major semiconductor client, Applied Materials (NASDAQ: AMAT), has provided positive guidance for 2025 demand. This reinforces the positive outlook for UMS’s core business.
Additionally, while contributing a smaller portion to overall sales, UMS’s aerospace segment is poised to benefit from the anticipated global surge in air travel.
Therefore, with momentum building across its key segments and strong strategic initiatives in place, UMS is well-positioned to achieve a substantial sales growth in FY 2025.
Profit might grow at a lower pace though, due to the increasing depreciation and expenses incurred for the expansion, potentially resulting in a slightly lower profit margin.
Robust Cash Flow and Balance Sheet
Despite the impact on the bottom line, UMS is well-positioned to manage this due to its robust cash flow and balance sheet.
This strength is evident in the company’s ability to increase its net cash position in FY 2025, as shown in the data below.
| FY 2023 Cash and bank balances | S$67.5 million |
| FY 2023 Bank borrowing | S$22.5 million |
| FY 2023 Net cash position | S$44.9 million |
| FY 2024 Cash from share issued | S$51.6 million |
| FY 2024 Operating cash flow | S$56.4 million |
| FY 2024 Purchase of property, plant and equipment | S$33.5 million |
| FY 2024 Dividends paid | S$38.4 million |
| FY 2024 Cash and bank balances | S$79.9 million |
| FY 2024 Bank borrowing | S$0.8 million |
| FY 2024 Net cash position | S$79.1 million |
| FY 2024 Increased in net cash position | S$34.2 million |
The successful share issuance in early 2024 played a crucial role, providing funds for the expansion and the repayment of bank borrowings. This strategic move has solidified UMS’s financial stability.
This strong financial position, combined with the projected increase in operating cash flow, positions it to declare a dividend of at least S$0.05 for this fiscal year. Moreover, the company can continue to pursue sustainable growth, ensuring long-term value creation.
My Personal Investment
Driven by a recent influx of funds into my CPF Investment Scheme account, I expanded my UMS position in mid-February at $1.05 per share. Additional portfolio adjustments were made, which I will detail in a future update.
Given the company’s current trajectory, I plan to retain my current UMS holdings.
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