UMS Holdings Limited’s Latest Earnings: An Assembly of Good Results

UMS Holdings Limited (SGX: 558) released its second-quarter earnings for its fiscal year ending 31 December 2015 yesterday evening.

As a brief introduction for some context later, UMS specializes in manufacturing high precision front-end semiconductor components in addition to providing complex electromechanical assembly and final testing services. The company’s clients come from a wide range of industries including semiconductor, electronics, and oil & gas.

With that let’s dig into UMS’s latest financial results.

Financial and business highlights

Total revenue came in at S$31.0 million for the second-quarter of 2015, an increase of 8% over a year ago. The top-line growth managed to flow to the bottom-line with UMS’s net profit after tax for the quarter jumping 14% year-on-year to S$8.3 million.

UMS was able to deliver the aforementioned growth as a result of its business activities picking up earlier than expected; in the first-quarter of 2015, UMS had thought that higher business volume would come in the second half of the year.

Moving on to UMS’s financial position, the company ended the reporting quarter with a healthy balance sheet – cash and cash equivalents stood at S$39.6 million and there was zero debt.

On the cash flow front, UMS also turned in a good quarter; operating cash flow, capital expenditures, and free cash flow clocked in at S$13.0 million, S$391,000, and S$12.6 million, respectively. These represented significant increases compared to a year ago when the selfsame figures were S$5.4 million, S$1.5 million, and S$3.9 million, respectively.

UMS had proposed to dish out S$0.01 per share in interim dividends for the reporting quarter, unchanged from the same period a year ago.

Outlook and valuation

UMS’s second-quarter performance had already come in better than expected. But it appears that the company’s also optimistic about its year-on-year results for the second half of the year. Here’s what Andy Luong, chief executive of UMS, has to say on the subject:

“This quarter had been particularly rewarding for the Group, with increased business activities and significant profit growth. With reference to our major customer’s view, we look forward to a possibly stronger second half of this year vis-à-vis the second half of last year, as we continue to pursue maximum returns for our shareholders.”

UMS’s shares last closed at S$0.505 on Monday. It’s valued at 9 times its trailing earnings and carries a high dividend yield of 11.7% based on its annual dividend of S$0.06 per share in 2014.

For more investing analyses and important updates about the stock market, sign up to The Motley Fool Singapore's free weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it can help you grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.