Broker: Maybank Research Pte Ltd
Date of Report: July 21, 2025

UMS Integration: Bursa Malaysia Listing Set to Unlock Valuation Upside and Fuel Growth

Overview: UMS Integration Targets Higher Growth with Bursa Malaysia Listing

UMS Integration (UMSH SP), a leader in precision engineering for semiconductor equipment, is gearing up for a pivotal phase with its secondary listing on Bursa Malaysia scheduled for August 1, 2025. This move is expected to catalyze a significant re-rating of its valuation, aligning it more closely with higher-valued Malaysian peers in the semiconductor supply chain, which typically trade at 25-35x P/E. Maybank Research maintains a BUY rating on UMS with a raised target price of SGD1.59, up from SGD1.19, reflecting a 20x blended FY25/26E P/E multiple.

Key Catalysts: Bursa Listing and Malaysian Operations

• Secondary Listing Impact: The Malaysian listing is anticipated to elevate UMS’s market profile and valuation, leveraging the higher P/E multiples of Bursa-listed semiconductor companies.
• Malaysian Revenue Surge: Q1 2025 saw revenue from Malaysia rise 287% year-on-year to SGD9.4m, driven by production ramp-up for a major new customer. Management targets a run-rate of SGD1.5m per week by end-2025, up from the current SGD0.6-0.65m per week.
• Positive Earnings Outlook: Earnings are believed to have bottomed in FY24, with a recovery expected as contributions from new and existing customers increase. The company declared a SGD0.01/share dividend for Q1 2025, underlining its commitment to shareholder returns.

Company Profile: Precision Engineering Powerhouse

UMS Integration specializes in assembling high-precision modules and components for front-end semiconductor equipment. The company maintains an entrenched relationship with Applied Materials (AMAT), a global leader in wafer fabrication equipment, and is expanding into non-semiconductor sectors such as aerospace through its subsidiary JEP.

Financial Performance and Projections

Value Proposition and Growth Drivers

• Specialized Capabilities: UMS is recognized for its expertise in high-precision assembly and engineering for the semiconductor industry, with strong diversification into aerospace and other sectors via acquisitions like JEP.
• Key Customer Relationship: Applied Materials remains a core client, providing a stable revenue base and opportunities for further expansion.
• Strategic Geographic Expansion: Malaysian operations are set to drive quarterly growth, backed by significant new orders and an ambitious capacity ramp-up plan.
• Strong Balance Sheet: The company remains in a net cash position, providing flexibility for dividends, capex, and potential M&A.
• Dividend Policy: UMS has a quarterly dividend payout policy, supported by robust free cash flow generation.

Financial Metrics and Key Ratios

• Revenue growth expected to rebound from -19.5% in FY23A and -19.3% in FY24A to 12% in FY25E.
• EBITDA margins are projected to expand from 26.9% in FY24A to 30.4% in FY25E, further rising to 33.3% by FY27E.
• Net profit margin is forecast to reach 22.2% in FY27E.
• The company’s payout ratio is expected to moderate from 98% in FY24A to 51.2% in FY27E, indicating sustainable dividend support.
• Robust liquidity is reflected in a current ratio of 6.1x in FY25E and a cash conversion cycle improvement from 282.5 days in FY24A to 167.7 days in FY25E and beyond.

ESG Performance: Progress and Areas for Improvement

UMS has made meaningful strides in its ESG framework, with a dedicated Risk Advisory Committee and Safety Subcommittee overseeing sustainability. Key observations:

• Environmental: UMS has set and achieved targets for energy and water intensity (0.1306 KWH/revenue and 0.0011 m³/revenue in 2021, beating targets). Waste management practices include recycling and compliance with regulations. Most delivery trucks meet EURO V emission standards.
• Social: Workforce of 592 (as of 2021), with a focus on equal opportunities, talent retention, and localization strategy. In Malaysia, 46% of employees and 50% of managerial roles are held by locals. 25% of managerial employees are female. No reported discrimination or exploitative labor practices.
• Governance: A five-member board with 60% independent directors. Dividends are declared quarterly, with the form and frequency based on performance and financial position. No whistleblowing, bribery, or corruption cases were reported in 2021.
• ESG Score: UMS has an overall ESG score of 48, below the average rating of 50, indicating room for improvement in quantitative environmental metrics and qualitative disclosures.

Risks and Swing Factors

• Upside Risks: Acceleration in revenue from new capacity, better-than-expected contribution from subsidiaries (Kalf Engineering, Starke, JEP), and improved cost control supporting margins.
• Downside Risks: Rising labor costs, workforce expansion challenges, lower-than-expected operating leverage, weaker USD, or imposition of tariffs on semiconductor industry exports to the US. Lower-than-expected dividends could deter yield-focused investors.

Shareholder Structure and Market Data

• Major shareholders include Andy Luong (16.3%), GN Jong Yuh (4.7%), and The Vanguard Group, Inc. (1.8%).
• Market capitalization: SGD1.0B (USD798M) with 707 million issued shares.
• 52-week high/low: SGD1.45/SGD0.93
• 3-month average turnover: USD3.8m
• Free float: 69.2%

Historical Price Performance and Analyst Ratings

• Stock has shown strong outperformance, with 12-month absolute returns of 19% and 3-month return of 44%.
• Relative to index, UMS delivered a 27% outperformance over 3 months but lagged the market by 2% in the past 12 months.
• Target price upgrades reflect improved outlook and Bursa listing catalyst: current TP SGD1.59 (+14% upside from the last close).

Conclusion: UMS Well-Positioned for Re-Rating and Sustainable Growth

UMS Integration’s secondary listing on Bursa Malaysia and the robust ramp-up of its Malaysian operations represent transformative catalysts that are expected to drive stronger revenue growth, margin expansion, and a re-rating of its valuation. Coupled with a resilient balance sheet, entrenched customer relationships, and a progressive dividend policy, UMS stands out as a compelling investment opportunity in the semiconductor supply chain. Maybank Research’s BUY rating and higher target price underscore confidence in UMS’s growth trajectory and ability to deliver value to shareholders in the coming years.