Maybank Securities analyst Jarick Seet has upgraded UMS Holdings to “buy” after the company reported record revenue and profits for the 3QFY2022 and 9MFY2022 ended Sept 30.
UMS Holdings released its results on Nov 11.
According to Seet’s estimates, UMS’s revenue and patmi for the quarter exceeded his expectations while the company’s 9MFY2022 patmi stood at 88% of his FY2022 revenue estimates.
In his report on Nov 14, Seet explained that his upgrade comes on the back of UMS’s “more secure outlook”, with management’s six-month outlook remaining “robust” from the large order backlog from its key customer.
Management added that the “slightly lower forecast” given by its key customer recently is unlikely to significantly impact its performance, the analyst adds.
As a result, Seet is expecting UMS to report a “strong” 4QFY2022 and a “better” FY2023. On this, he has upped his patmi estimates by 13.4% for FY2022 and 13.8% for FY2023.
See also: UMS reports record revenue and profits for 9MFY22, declares third dividend of 1 cent per share
The higher estimates have led to a higher target price of $1.34 from $1.20 before, although pegged to a lower FY2023 P/E of 8.0x from 8.5x before.
The lower P/E was made in a bid to be “conservative” due to the “challenging macro sector outlook”, says Seet.
Based on his estimates, UMS’s valuation remains attractive at an FY2023 P/E of 6.4x.
As at 12.49pm, shares in UMS are trading 2 cents higher or 1.67% up at $1.22.
