• Semiconductor firm UMS Integration is about to do something not seen before. On 1 Aug, the Singapore-listed company will achieve a secondary listing on Bursa Malaysia. • UMS provides high precision components and complex electromechanical assembly and final testing for semiconductor equipment manufacturers. • Year-to-date UMS stock is up around 40% (from $1.05 to $1.45). Still, a big valuation gap (around 25%) remains compared to Malaysian peers trading at much higher multiples (see table):
 • UOB Kay Hian recommends a buy on the stock with the idea that the valuation gap could close as UMS management is actively engaging fund managers and other investors in Malaysia.
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Excerpts from UOB KH report
Analyst: John Cheong
UMS Integration (UMSH SP)
Expect Good Results And Multiple Re-rating; Raise Target Price By 31% To S$1.73
| We expect multiple positive catalysts ahead for UMS: a) In its latest outlook, UMS expects to achieve its double-digit revenue growth guidance for 2Q25 as it continues to see healthy orders from its key customers who remain positive in their latest guidance;
b) its dual listing on Bursa Malaysia is attracting strong investor interest, which should help narrow UMS’s valuation gap of about 25% vs its Malaysia peers; and Maintain BUY with a 31% higher target price of S$1.73. |
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| WHAT’S NEW |
• Healthy orders from new customer; expect UMS to meet our 2Q25 earnings estimate of S$11m (+12% yoy and qoq).
UMS Integration Ltd (UMS) continues to see healthy orders from its new customer while the order from old customer remains stable.
Also, it expects to see revenue for its integration system catch up with our estimate in 2Q25, after successfully resolving the supply disruption issues in 1Q25.
Hence, we expect UMS to deliver on its earnings estimate of S$11m (+12% yoy and qoq) for 2Q25.
Furthermore, UMS is encouraged by the strong order flow from its new key customer as it seeks to divert its US supply source to Asia.
UMS’ capability to complete the majority of the manufacturing processes in-house - such as plating, anodising, brazing, welding, chemical cleaning, etc - have helped it maintain healthy margins and enable it to achieve prompt delivery to its customers.
Andy Luong, chairman and CEO of UMS -- and JEP Holdings. NextInsight file photo.• Dual listing in Bursa Malaysia has attracted strong investor interest; valuation gap with Malaysian listed peers should narrow subsequently.
UMS’ dual listing in Bursa Malaysia will commence 1 Aug 25.
It has seen strong investor interest at the roadshows it has attended so far. After the dual listing, UMS is hoping to narrow the valuation gap with its Malaysian peers.
UMS is currently trading at around 25% discount vs its Malaysian peers, at 2026F PE of 18x vs 25x. Key peers highlighted include UWC and Sam Engineering.
UMS also stated that its current dividend yield of 4% and frequent dividend payment on a quarterly basis are more appealing compared with its Malaysian peers.
We also understand that majority of the institutional funds in Malaysia have a mandate of investing only in Bursa-listed stocks.
Moreover, UMS will engage the service of market makers at the initial phase to help enhance the liquidity of the Malaysia-listed entity before more shares are transferred to Malaysia.
• Increasing market engagement ahead of dual listing. To improve market awareness of the Malaysia investment community on UMS, the company has increased market engagement, including attending more non-deal roadshows (NDR), hosting plant visits in Malaysia, hosting seminars with retail investors, increasing media coverage, and engaging with social media influencers.
• Maintain BUY with a 31% higher target price of S$1.73, based on a higher PE-based valuation of 23x 2026F EPS (17.5x based on +1 SD previously).  John Cheong, analystOur valuation is pegged to 2SD above UMS’ historical mean PE to reflect the valuation re-rating from the dual-listing exercise and better earnings quality from new contributions from its new customer. Our valuation multiple peg of 23x 2026F PE is at an 8% discount vs its Malaysian peers’ 25x 2026F PE. UMS offers a better dividend yield and better net margin compared with the Malaysian peers. SHARE PRICE CATALYST • Higher-than-expected factory utilisation rates. • Return of orders for aircraft components to benefit subsidiary, JEP Holdings. • Better-than-expected cost management. |
Full report here.
