• The AI sector boom has continued to uplift the earnings and outlook of various parts of the supply chain, of which UMS Integration is a part. UMS is a Singapore-based company that provides manufacturing, assembly and integrated systems for front‑end semiconductor equipment, and also serves aerospace and materials-distribution customers. • Historically, its key client has been Applied Materials but it has added another major client, unidentified but referred to as "L" (likely Lam Research) by analysts. UMS' 1Q financial results (S$14 million net profit, +25% y--o-y) have sparked a huge re-rating, as shown in the table:
• Leading the charge is CGS International's William Tng, CFA who cites a strong outlook and improving execution with new customer L . He has rolled over his valuation to FY28F earnings to capture the stronger profit potential from the two customers in an unprecedented semiconductor upcycle . • Like CGS, UOB KH has based its new target price on a higher PE of 37.5x for 2028 earnings. |
Excerpts from CGS International report
Analyst: William Tng, CFA
■ UMS’s 1Q26 revenue (S$69.4m, +3.9% qoq, +20.4% yoy) was in line with expectations at 24%/23% of our/Bloomberg consensus FY26F forecasts.
■ We reiterate our Add call with a higher S$4.17 TP as 1Q26 performance reaffirms confidence in our 35.4% FY25-28F EPS CAGR expectation. |
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| Management positive on FY26-28F outlook |
UMS remains confident on its prospects noting that the group was benefitting from the AI driven increase in demand for deposition, etch and advanced packaging tools across memory and foundry chipmakers. 
Andy Luong, chairman and CEO of UMS -- and JEP Holdings.In its 1Q26 results press release, UMS commented that the order flow from the group's new key customer (customer L) remains robust, as it seeks to divert its US supply source to Asia.
In the coming months, UMS plans to continue with more new product introduction (NPI) qualifications from this new key customer.
UMS also expects its Semiconductor Integrated Systems demand to increase as its existing key customer’s outlook stays strong due to higher semiconductor capital spending from CY26F to CY28F driven by chipmakers’ capacity expansion.
| Retain Add with a higher S$4.17 TP |
With new customer L’s positive outlook (in addition to customer A) and UMS’s improving execution with this customer, we raise our FY27-28F EPS estimates by 6.5-13.9%.
We reiterate our Add call as we project a robust 35.4% EPS CAGR over FY25-28F.
We now use 37x P/E multiple (4 s.d. above its 5-year, FY22-26F average) and rollover to FY28F to capture the stronger profit potential from these 2 customers building up to FY28F.
Our previous valuation was 26x FY27F P/E. This raises our TP to S$4.17.
 William Tng, CFA, analystThe company’s successful secondary listing on Bursa has also widened its potential pool of investors and helped support improved valuations, in our view. Re-rating catalysts: 1) further acceleration in orders for its new Penang plant from its new customer, and 2) return of orders for aircraft components. Downside risks: 1) negative impact from its key customer’s loss of sales in China, and 2) slower-than-expected progress in its business with its new customer. |
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