Beautiful small cap stock. All the ticks were in the right places - higher revenue, ROE > 15%, growing EPS, projected PE < 8, projected dividend yield of 10%, strong balance sheet (net cash of sgd29 million), glowing outlook for semi conductor equipments etc.
Unfortunately, the founder took the opportunity to sell down about 6 million of UMS stocks the very next day of the results announcement, thus capping the share rise. This was the second time he has done this over recent years.
He may have his reasons to dispose the shares but the timing is awful in the eyes of the shareholders who have expected a good run in the share price after the announcement of the record breaking performance. I am a Malaysian and I will certainly hope to attend the next AGM and put across my query to him.
I still have faith in UMS and am fully vested. Just hope that the Chairman has similar dose of faith in UMS too!.
In CIMB report dated 5Mar, it was stated that "major shareholder Andy Luong continued to sell some of his shares as part of his wealth planning process but the share sales appear to have halted for the moment".
This is a relief for other shareholders and the share price recovered to 0.66 today. With a potential sweet dividend yield of 10% for FY14, I should expect UMS's price (cum dividend of 3.5 cents) to continue the up-trend. Assuming a dividend yield of 8%, the share price should rise to 0.875 - a further upside of 32% from today's close.
The limiting factor to Straco's 2 aquariums is the fixed capacity for visitors. At some point, it gets crowded and the revenue/profit cannot grow. Are they still far away from those limits?
Straco Quarterly Revenue In 2013
1st Q 2013:
Revenue = SGD 11.3m
2nd Q 2013:
Revenue = SGD 23m
3rd Q 2013:
Revenue = SGD 30.5m
4th Q 2013:
Revenue = SGD 14.6m
Yeng, by looking at Straco 2013 quarterly revenue, 3rd quarter being the best season may be crowded during some days as you had point out. But looking at the revenues for the other 3 quarters it should not have over crowded problems except for public holidays or weekend. It should be able to cater for more visitors.
Some time last year I had visited RWS 'Sea Aquarium' during a public holiday with my family. It was very crowded and visitors had to wait for about 3 hours. We register as 'Special Visitors' by paying additional fee. That reduced our waiting times to one and a half hour. There are many visitors willing to pay additional fee too. It takes more than half hour just to register and pay additional fee.
By looking at the revenue, Straco should be able to growth its revenue & profit for the next few year.
Lotustpsll had point out "What is important is that the company is looking at expanding its business model. Management is aware that Straco needs to expand".
UMS Holdings has indeed outperformed the market, but it is a little disappointing that the CEO himself has constantly been reducing his stake, cashing in on the profits.
Capex in PPE (SGD’000):
FY2010 = 7,621
FY2011 = 7,481
FY2012 = 1,994
FY2013 = 1,747
4-Y-AVG = 4,711 (4-year-average)
(data from ums thread in valuebuddies)
Wanted to point out over the past 2 years, management has not been spending much on capex. Hence, we have to becareful of when management starts increasing capex again, as it would definitely reduce the yearly fcf and perhaps the company's ability in mantaining such a high dividend.
Earnings trend for 1H remains positive and will be driven by its close business association with Applied Materials (AMAT), which makes systems that perform most of the steps in semiconductor chip fabrication. Note - AMAT is set to consolidate its position as the world’s largest semiconductor equipment maker with the acquisition of the third-largest player, Tokyo Electron.
AMAT currently owns 6% of UMS and just wonder whether this holding will remain static given the positive outlook in the semiconductor industry. It will make business sense for AMAT to raise its stake!.
UMS closed strongly today at 68.5c and at good volume. Cant help thinking that the run up is kinda expected with projected dividend of 7c for FY14, still yielding over 10%.
From a business strategy standpoint it would make business sense for Applied Materials (AMAT) to raise its current holding of 6% on UMS. Business alliance of both parties are strong and the dividend payments will provide funding for AMAT to recover its investment cost.
With the favourable outlook for semiconductor industry, this may prompt AMAT to consider such strategic move. Food for thought.
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