Broker: Maybank Research Pte Ltd
Date of Report: August 13, 2025

UMS Integration: Strong 2H25 Outlook with New Product Wins and Dividend Potential

Overview and Investment Thesis

UMS Integration (UMSH SP/UMSINT MK) is positioned for a robust second half of 2025, driven by a surge in revenue growth, promising new product launches, and potential shareholder rewards. The company remains a key precision metals engineering player, specializing in high-precision components and modules for front-end semiconductor equipment. With entrenched relationships—especially with Applied Materials (AMAT)—UMS is well-placed to capitalize on sector tailwinds and outsourcing trends.

Maybank Research maintains its BUY rating on UMS Integration, with an unchanged target price (TP) of SGD1.59, representing a 12% upside from the current share price of SGD1.48.

Key Highlights and Drivers

• 2Q25 Results: Revenue jumped 20% year-on-year to SGD67.4m, while PATMI increased 10% YoY to SGD10.3m, in line with consensus and internal estimates.
• New AMAT Product: UMS has secured a significant new product order from AMAT, with production starting in 4Q25. This could potentially add up to 20% of existing AMAT revenue if ramp-up proceeds smoothly.
• Malaysia Operations: Revenue from Malaysia surged 250% YoY to SGD17.4m in 2Q25, mainly due to the ramp-up of a new customer. Management expects continued growth as more parts are qualified, though worker shortages have prompted recruitment from Singapore and subsequent local training.
• Capex Cycle Near Completion: With major capital expenditures winding down by end-2025, management signals the possibility of increased dividends, potentially via bonus shares, echoing previous practices from 2021.

Financial Performance Snapshot

Strategic Positioning and Value Proposition

UMS Integration is a precision metals engineering firm, specializing in modules and components for semiconductor equipment. Its core business is bolstered by a longstanding partnership with AMAT, a world leader in wafer fab equipment. Additionally, through its subsidiary JEP, UMS is expanding into non-semiconductor sectors such as aerospace, leveraging industry outsourcing trends.

UMS boasts a strong net cash position and a reliable free cash flow generation track record, supporting its dividend policy and financial resilience. Its ability to maintain a net cash balance sheet positions the company to weather industry cycles and capitalize on growth opportunities.

Growth Drivers and Risk Factors

• Upside Potential:
  • Accelerated revenue momentum from capacity expansion.
  • Higher-than-expected contributions from subsidiaries (Kalf Engineering, Starke, JEP).
  • Effective cost controls supporting margin expansion.
• Downside Risks:
  • Rising labor costs or difficulties in expanding the workforce could impact order fulfillment.
  • Negative operating leverage if volumes decline, leading to margin pressure.
  • Lower-than-expected dividends could deter yield-focused investors.

ESG Performance and Corporate Governance

UMS demonstrates a commitment to sustainability and responsible governance. Key observations include:

• Governance, economic performance, product compliance, and customer privacy are top priorities for stakeholders.
• Environmental targets: Energy intensity of ≤0.13 KWH/revenue, water intensity of ≤0.0012 m³/revenue, both achieved in 2021.
• Hazardous waste is managed in compliance with regulations, with metal scraps and packaging recycled wherever possible.
• Board composition: Five directors, with three independent non-executives, and the founder serving as executive chairman and CEO.
• Quarterly dividend policy, with absolute dividend amounts maintained even when bonus shares are issued.
• Workforce localization: 46% of employees and 50% of managerial roles in Malaysia are local; 25% of managers are female.
• No significant fines for environmental non-compliance, nor cases of discrimination or corruption reported in recent years.

UMS’s overall ESG score is 48, below the sector average of 50. While it has robust internal policies and targets, there is room for improvement in quantitative environmental metrics and qualitative parameters.

Key Quantitative and Qualitative ESG Metrics

Financial Ratios and Performance Metrics

• EBITDA margin is expected to rise from 26.9% in FY24A to 33.3% in FY27E.
• Pretax profit margin improves from 19.3% (FY24A) to 25.4% (FY27E).
• Dividend cover grows from 1.0x in FY24A to 2.0x in FY27E.
• Current ratio strengthens from 5.4x (FY24A) to 7.0x (FY27E).
• Net gearing remains consistently at net cash, reflecting financial strength.

Shareholder Information and Market Statistics

• 52-week share price range: SGD1.57–0.93.
• Market capitalization: SGD1.0 billion (USD815 million).
• Issued shares: 707 million.
• Major shareholders: Luong Andy (16.3%), GN Jong Yuh (4.7%), The Vanguard Group, Inc. (1.8%).
• Free float: 69.2%.
• 3-month average turnover: USD5.9 million.

Historical Share Price Performance

• Absolute return: 10% (1M), 32% (3M), 38% (12M).
• Relative to index: 6% (1M), 22% (3M), 7% (12M).

Analyst Rating and Recommendation

• BUY rating maintained with an unchanged TP of SGD1.59.
• Return expected to be above 10% over the next 12 months, including dividends.
• Strong dividend policy and potential bonus shares as catalysts.

Conclusion: Strong Outlook for UMS Integration

UMS Integration’s strong operational performance, new product launches, and improving profitability point to a promising second half of 2025 and beyond. With its robust balance sheet, established customer relationships, and commitment to shareholders, UMS stands out as a compelling investment in the precision engineering and semiconductor sector. Investors can expect stable dividends, potential bonus shares, and sustainable growth as the company continues to deliver on its strategic initiatives.