invest asean conference january 2013 - stock exchange of ... · compound annual growth rate (cagr)...
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Invest ASEAN ConferenceJanuary 2013
Forward Looking Statement
This presentation contains forward looking statements which can be identified by the context of the statement and generally arising when the Company is discussing its beliefs, estimates or expectations. Such statements may include comments on industry, business or market trends, projections, forecasts, and plans and objectives of management for future operations and operating and financial performance, as well as any related assumptions.
Readers of this presentation should understand that these statements are not historical facts or guarantees for future performance but instead represent only the Company’s belief at the time of the statement were made regarding future events, which are subject to significant risks, uncertainties and other factors, many of which are outside the Company’s control. Actual results and outcomes may differ materially from what is expressed or implied in such forward looking statements.
The Company cautions readers not to place undue reliance on any forward looking statements included in this presentation, which speaks only as of the date made; and should any of the events anticipated by the forward looking statements transpire or occur, the Company makes no assurances on what benefits, if any, the Company will drive therefrom.
Agenda
Corporate Profile
Corporate Profile
• UMS Holdings Limited is a one-stop strategic integration partner providingequipment manufacturing and engineering services to Original EquipmentManufacturers of semiconductors and related products
• Our core capabilities are in advanced precision engineering, specifically inthe manufacturing of high precision front-end semiconductor components
• We perform complex electromechanical assembly and final testing services inthe production of modular and integrated systems for original semiconductorequipment manufacturers.
• We provide precision engineering services to other industries primarily in theoil & gas industry
Corporate Profile
Strategic Positioning
Industry Value Chain
UMS• Machined Components +
Subassembly of systems for front end semiconductor equipment manufacturing
Applied Materials• Front end
semiconductor equipment manufacturer
Samsung / Intel / TSMC / ASE / STATS ChipPac
• Integrated Circuit (IC) producer
• Packaging & testing of IC
Mobile Devices
• End products brands / manufacturing (eg iPad, iPhone)
LocalesLocation Function
Singapore • Corporate Headquarter• 211,500 sq. ft.• R&D, engineering and other high-value activities
Malaysia • Volume production• 500,000 sq. ft.
California,USA
• Procurement and purchasing center• IMT’s gas line business: Close proximity to key customers’
R&D function
Texas,USA
• IMT’s gas line business: Close proximity to key customers’ volume production facilities
Our History
• Founding of Long’s Manufacturing in Silicon Valley, USA by Mr AndyLuong
• Incorporation of Uraco Manufacturing (Pte) Ltd in Singapore, JVbetween Mr Andy Luong and URACO Holdings Limited
• Uraco Manufacturing (Pte) Ltd renamed UMS Semiconductor Pte Ltd
• Norelco Centreline Holdings Limited completes merger with UMSSemiconductor Pte Ltd
1984
1996
2000
2004
Our History
• Ground breaking of a new 80,000 sq. ft. facility in Changi North Rise,Singapore
• Entered into an exclusive contract with a major oil & gas company• Change of Company Name to UMS Holdings Ltd• Ground breaking of Penang, Malaysia facility
• Grand opening of Changi North Rise facility
• Penang Hub in operation
• UMS Penang obtained Tax-free pioneer status from MIDA for 5 years+ 5 years starting 1 April 2011
• UMS acquires Integrated Manufacturing Technologies Group
2006
2007
2008
2009
2011
2012
Competitive Edge
1. At the right place at the right time
• Visionary transformation of the Group since 2008
• Move from sunset sectors such as hard-disk drive to re-focus on serving the higher margin semiconductor industry
• This change further boosted by 3 factors;
• Our major customer shifting their production base to Asia
• Awarded manufacturing rights for key system of major customer
• Key system experienced huge demand driven by a boom in the mobility sector, i.e. smartphones and tablets
• Business success also translated into financial success and sets the foundation for the Group’s strong dividend track record
Our Edge
Deep + Integrated Engineering Capabilities
• Precision Machining
• Metal Finishing Process
• System Integration
• Refurbishment
• Prototyping
• Vendor Managed Inventory
Accelerate customer’s time-to-market
• Semiconductor Equipment (Applied Materials Inc)
• 40 in-house special process to increase speed of delivery
• Oil & Gas Services (Schlumberger)
Expand margin and enhance cash flow
• Cost control
• Manufacturing efficiency
• Procurement expertise
• Cash and financial management
2. Highly Integrated Manufacturing Process
Our Edge
3. Entrenched Relationship with Top Global Customers
• Serves a select group of leading global corporations (eg, Applied Materials Inc, Schlumberger)
• Deep & continuous collaborative effort from R&D to manufacturing of components to subassembly to surface finishing
• High barrier of entry for competitors
• Management criteria for customer acquisition:
• Earnings accretive
• Healthy and sustainable margin
Our Edge
4. Capacity for growth• > 700,000 sq. ft. of combined space in Singapore and Penang,
Malaysia to meet new demands and customers
• Improved cost efficiencies by transiting more production from Singapore to Malaysia which has a lower cost infrastructure
Our Edge
5. Strong Corporate Balance Sheet to Support M&AOpportunities
Cash and bank balances of S$33.5 million as at 30 September 2012, withminimal debt
M&A opportunities will be considered when such acquisition(s) is able to fulfillthe following:
• Expands the Group’s geographical reach into new regional markets
• Protects / improves its profit margins
• leveraging on its existing manufacturing capacities and capabilities
Our Edge
Financial Highlights
Financial Highlights
138.2
93.4
47.3
129.0
114.4
0
20
40
60
80
100
120
140
160
FY2007 FY2008 FY2009 FY2010 FY2011
Revenue – annualS$ M
Semicon Integrated System commences
Financial Highlights
12.1
1.8
-24.3
28.7 27.6
-30
-20
-10
0
10
20
30
40
FY2007 FY2008 FY2009 FY2010 FY2011
Net Profit - AnnualS$ M Semicon Integrated
System commences
Financial Highlights
Geographical Contribution (2007-2011)
FY2007 FY2008 FY2009 FY2010 FY2011
Others 17.4 14.5 10.3 20.2 17.4
United States 99.6 68 31.4 39 27.7
Singapore 21.3 10.8 5.6 69.8 69.3
0%
20%
40%
60%
80%
100%
Financial Highlights
Segmental Contribution (FY2011 vs FY2010)
6%
94%
FY2011Revenue
CEM
Semicon
8%
92%
FY2010Revenue
Financial Highlights
17.0
24.7
35.3 35.2 33.8 35.032.7
21.725.2
32.0
36.6
23.0
0.0
10.0
20.0
30.0
40.0
Revenue – Sequential
Financial Highlights
1.1
4.6
7.5 7.69.1
7.6 7.0
3.8
5.7 6.0
7.6
2.1
3.5
0
1
2
3
4
5
6
7
8
9
Net Profit – Sequential
Financial Highlights
Balance SheetS$’000 30 September 2012 31 Dec 2011
Current Assets 78,965 82,104
Trade Receivables 10,344 11,081
Inventories 35,090 33,076
Cash & cash equivalents 33,531 37,947
PPE 52,336 59,495
Current Liabilities 30,297 21,786
Net Tangible Assets 105,617 124,728
Debt / Borrowings 17,735 2,665
Return on Assets 10%^ 13%
Return on Equity 11%^ 15%
* The Group’s borrowings comprise only finance leases that are secured by mortgages over the plant and machinery of a subsidiary^ Annualised basis
Strong Dividend Track Record & Payout Ratio
FY2008 FY2009 FY2010 FY2011 FY2012*
Dividend per share
0.5 cents 1.0 cents 5.0 cents 6.0 cents 3.0 cents (declared to-date)
Earnings per share
0.49 cents (6.87) cents 8.25 cents 8.04 cents 4.59 cents(9 mths)
Payout Ratio 102.0% N.A. 60.6% 74.6% ??
Dividend Yield(based on share price of S$0.42)
1.2% 2.4% 11.9% 14.3% ??
Dividend Record
*UMS has instituted a quarterly dividend policy since middle of 2012
Financial HighlightsCash Balances & Free Cash flow from Operations
S$ M
21.218.8
24.5
20.3
37.7
10.1
-7.2
-0.2
23.7
31.7
-10
-5
0
5
10
15
20
25
30
35
40
FY2007 FY2008 FY2009 FY2010 FY2011
Cash Balances Free Cash Flow
* Cash Conversion Ratio = Net Cash Generated from operating activities as a percentage of Net Profit
Outlook
Semicon Outlook
A better year ahead?
The International Data Corporation (IDC) is forecasting that semiconductor revenues worldwide will improve by 4.9% to $319 billion in 2013 and log a compound annual growth rate (CAGR) of 4.1% from 2011-2016, reaching $368 billion in 2016.
Bright spots for the semiconductor market include smartphones, tablets, set-top boxes, and automotive electronics, which IDC expects will continue to be key drivers of growth over the coming years.
Gartner stated that Global semiconductor revenues are projected to total $311 billion in 2013, up 4.5 per cent from 2012
Similarly, The World Semiconductor Trade Statistics (WSTS) has released its updated semiconductor market forecast that the world semiconductor market in 2012 will be US$290 billion, down 3.2% from 2011, followed by a recovery of positive 4.5% growth to US$303 billion in 2013
Share Performance
Share Statistics
• Listed on 25 May 2001
• Share price at listing: S$0.21
• IPO Placement Shares: 33,800,000
Major Shareholders % of shares held
Andy Luong 28
Applied Materials, Inc 6
Basic Share Data (as at 08 Jan 13)
Share Price (as at 08 Jan 13) S$0.420
Average Daily Volume (since 09 Oct 12)
700,161
No. of Issued shares excluding Treasury Shares
343,754,327
Estimated Free Float 66%
Market Capitalisation S$144.4M
Share Price
Investment Merits
Investment Merits
Unique business environment / position in the semiconductor industry
Possible re-rating of semiconductor industry as there are signs of current trough bottoming out
Strong positive cash generation ability
No major capital expenditure within the next few years
Attractive valuation at the current share price level
High dividend yield - more than 11% in the past two years
Investment Merits
Track record of high dividend payout ratio
Policy to continue quarterly dividend payout from 2nd half of FY2012
Thank you