UOB Kay Hian Private Limited
Date of Report: 16 July 2025

UMS Integration: Strong Growth Ahead with Dual Listing and Sector Tailwinds – Target Price Raised to S\$1.73

Overview: UMS Integration Positioned for Multiple Catalysts and Valuation Upside

UMS Integration Ltd. (UMS), a precision engineering company specializing in high-precision components and complex electromechanical assemblies for semiconductor equipment manufacturers, stands at the cusp of a major re-rating. The company is set for strong earnings momentum, driven by robust order flows, an upcoming dual listing in Malaysia, and increased market engagement. UOB Kay Hian maintains a BUY rating and raises the target price by 31% to S\$1.73, representing a 24.5% potential upside from current levels.

Key Highlights and Investment Thesis

• Double-digit revenue growth guidance for 2Q25: UMS expects to meet its double-digit revenue growth for 2Q25, underpinned by healthy orders from both new and existing customers.
• Dual listing on Bursa Malaysia: The dual listing, scheduled to commence on 1 August 2025, is attracting strong investor interest and is expected to close UMS’s 25% valuation gap versus Malaysian peers.
• Enhanced market engagement: UMS is ramping up investor outreach in Malaysia through roadshows, plant visits, seminars, media coverage, and social media engagement, aiming to boost market awareness and liquidity.
• Strong operational capabilities: The company’s in-house manufacturing processes—plating, anodizing, brazing, welding, chemical cleaning—help maintain healthy margins and ensure prompt delivery to clients.

Financial Overview: Key Metrics and Forecasts

UMS Integration: Operational and Strategic Developments

Healthy Orders and Supply Chain Recovery: UMS continues to receive strong orders from its new key customer, who is actively shifting its US supply chain to Asia, and maintains stable demand from existing clients. The company has resolved prior supply disruptions, allowing its integration system revenue to recover in line with forecasts. UMS expects to report 2Q25 earnings of S\$11m, a 12% increase year-over-year and quarter-over-quarter.
Dual Listing to Narrow Valuation Gap:
UMS’s shares currently trade at an 18x 2026F PE, a 25% discount to Malaysian peers (25x), such as UWC and Sam Engineering. The dual listing is expected to attract Malaysian institutional investors, many of whom are mandated to invest only in Bursa-listed stocks. UMS’s 4% dividend yield and quarterly payouts are superior to most Malaysian competitors, and market makers will be engaged initially to enhance liquidity.
Intensified Market Engagement:
Ahead of its Bursa Malaysia debut, UMS is increasing investor engagement through non-deal roadshows, plant tours, investor seminars, media coverage, and influencer partnerships to boost its profile and share liquidity.

Industry Outlook: Semiconductor and Aviation Sector Growth

Semiconductor Equipment Spending on the Rise: Worldwide fab equipment spending for front-end facilities is projected to grow 2% year-on-year to US\$110 billion in 2025, marking the sixth consecutive year of expansion. The following year, spending is forecast to surge 18% to US\$130 billion, fueled by high performance computing, memory demand for data centers, and the proliferation of AI requiring more silicon content in edge devices. About 50 new fabs are slated to come online over 2025-2026.
Aviation Industry Tailwinds and Risks:
The aviation sector is rebounding sharply, with global air travelers expected to surpass 5 billion in 2025 and industry revenues exceeding US$1 trillion for the first time. However, potential US tariffs and slower economic growth could pose risks to this recovery, impacting both passenger and freight demand.

Valuation, Risks, and Share Price Catalysts

Valuation and Recommendation: The new target price of S\$1.73 is based on a 23x 2026F PE, which is 2 standard deviations above UMS’s historical mean, reflecting the anticipated valuation re-rating from the dual listing and enhanced earnings quality from new customer contributions. This multiple remains at an 8% discount to Malaysian peers’ 25x 2026F PE, despite offering a better dividend yield and net margin.
Key Share Price Catalysts:

• Higher-than-expected factory utilization rates
• Resumption of aircraft component orders benefiting subsidiary JEP Holdings
• Stronger cost management

Peer Comparison: Regional and Global Semiconductor Equipment Players

Profit & Loss, Balance Sheet and Cash Flow Highlights

Profit & Loss (S\$m):

• 2025F Revenue: S\$267.1m
• 2025F Net Profit: S\$47.3m
• 2025F EBITDA Margin: 30.1%
• EPS Growth 2025F: +15.6%

Balance Sheet (2025F):

• Fixed Assets: S\$169.2m
• Cash/ST Investment: S\$97.4m
• Shareholders’ Equity: S\$430.2m
• Net Cash to Equity: (17.4)%

Cash Flow (2025F):

• Operating Cash Flow: S\$62.1m
• Investing Cash Flow: (S\$30.0m)
• Financing Cash Flow: (S\$13.5m)
• Ending Cash: S\$97.4m

Key Metrics for 2025F-2027F

• Net margin rising from 17.7% (2025F) to 18.5% (2027F)
• ROE improving from 11.2% (2025F) to 13.2% (2027F)
• Debt to equity remains low at 5.2% (2025F) and declines further

Conclusion: UMS Integration Poised for Re-rating and Sustained Growth

UMS Integration is strategically positioned to benefit from secular growth in semiconductor equipment spending and aviation recovery, while its dual listing in Malaysia is set to unlock valuation upside and broaden its investor base. With robust financials, attractive yield, and improving margins, UMS stands out among regional peers. Investors should watch for further catalysts such as higher factory utilization, recovery in aircraft component demand, and successful cost management.
Broker: UOB Kay Hian Private Limited | Date: 16 July 2025