1Q15 results in line
1Q15 sales/core net profit formed 24% of CIMB’s full-year expectations (no
consensus). Given the appreciation of the US$ versus the S$, the gross material
margin rose to 57% in 1Q15 (53% in 1Q14). Depreciation expenses increased
10% yoy due to additional equipment capex to replace certain old machines.
UMS's balance sheet remains healthy, with net cash of S$40.8m (no debt).
Operating cash flow in 1Q15 was S$6.6m while free cash flow was S$6.4m.
Sequential growth expected
In the CEO’s own words, “we are pleased to observe that the business
environment has showed signs of improvement following a weak fourth quarter
last year.
We remain confident of the business outlook for the rest of the year,
especially in the second half. While we continue to seek other avenues of
growth, we will continue to return more value to our shareholders via
dividends”. Industry forecasters SEMI and Gartner are similarly positive on the
outlook for the semiconductor industry in 2015.
Upgrade to Add as yoy earnings recovery kicks in
UMS share price is likely to re-rate as the slowdown that started in Jun 14
comes to an end. Strong cash flow generation, net cash (zero debt) balance and
minimal capex needs ensure that our base case 5Scts DPS in FY15-17 is
protected.
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