UMS shines on debut, shrugging off global tariff concerns

The Star

3 days ago

KUALA LUMPUR: UMS Integration Ltd, which made its debut on the Main Market of Bursa Malaysia on Friday, expects minimal impact from US tariffs, as any applicable tariffs on shipments to the US will be absorbed by its customers.
Executive director Stanley Loh Meng Chong said most of the group's products are supplied to major clients in Malaysia and Singapore. He said the company does ship some of its products to the US but maintained that 'customers will absorb it, given that it is all customised products'.
'If these customers do not receive these products, then they will not be able to ship their products. Hence, we do not see any impact from US tariffs for now,' he told the media following the group's listing ceremony.
Malaysia managed to strike a deal with Washington, resulting in a lower tariff rate of 19%. Meanwhile, levies on Singapore goods exported to the US are likely to remain at 10%.
UMS specialises in complex precision machining and the fabrication of sheet metal, as well as the provision of related services, such as value-added sub-module assembly for the semiconductor and aerospace industries and full module assembly services for front-end semiconductor equipment and surface treatment.
For the financial year ended Dec 31, 2024 (FY24), its semiconductor segment accounted for 84.5% of total revenue, followed by aerospace at 10.9%, and others contributing the remaining 4.6%.
UMS has production facilities in Penang, Singapore and the US. The group started its operations in Penang in 2009 at a 400,000 sq ft production facility in Simpang Ampat.
Last year, the group commissioned and completed a new 300,000 sq ft manufacturing plant in Penang at a cost of about RM234mil. Its client is an undisclosed Nasdaq-listed US semiconductor equipment manufacturer.
Further, UMS is planning to construct an additional facility in Penang, targeted for completion in 2028.
Chief executive officer Andy Luong said the company's headquarters will remain in Singapore and the plant in Penang will be primarily focused on volume manufacturing.
'We have a larger team and space in Penang. As for engineering capabilities and research and development it will be carried out in Singapore. That said, we will see how the business progresses over time. If we have a larger pool of investors in Malaysia, we will look into the benefits of relocating here,' he said.
Loh said the UMS' earnings outlook remains supported by the strong demand for semiconductors especially in the artificial intelligence segment which requires a lot of chips.
'Many companies are ramping up capital expenditure to invest in more semiconductor equipment to produce more chips. This will drive the demand for semiconductor equipment, and as a contract manufacturer, UMS will be able to benefit from this trend.
'Hence, we expect this year to be better than last year, and in the years to come, we believe we will continue to benefit from the trend of higher equipment spending,' he said.
UMS' listing marks Malaysia's first secondary listing by a Singapore-listed company.
Shares of UMS made a strong debut on the Main Market. The stock opened at RM5.15, a premium of 3% over its reference price of RM5. The counter hit a high of RM5.40 and a low of RM5.15 in intraday trade. UMS closed its maiden trading day on Bursa Malaysia at RM5.50.
Rakuten Trade has a fair value of RM5.47 for UMS premised on its role in front-end of the semiconductor supply chain, focus on critical semiconductor components that have a high barrier and lesser competition, strong operating performance with consistent double-digit profit margin and solid net cash position.