Semiconductor equipment manufacturing firm UMS Holdings has reported a staggering 593% surge in earnings for its 4QFY2021 ended December 2021.
Its 4QFY2021 came in at $7.2 million, compared to $1.04 million in the same period a year ago. 4QFY2021 revenue came in at $87.2 million, a 98% jump compared to $44.1 million in 4QFY2020.
Full year earnings stood at $57.5 million, a 59% increase, while revenue came in at $271.2 million, a 65% rise compared to the $164.4 million in FY2020.
As such, the company will be doubling its proposed dividend from one cent - announced in FY2020 - to two cents in FY2021.
In a results release on Feb 28, UMS says the “exceptional performance” was driven by sustained acceleration of global chip demand as well as the increasing capex of semiconductor fabs worldwide.
UMS says it logged its highest-ever annual revenue, surpassing S$250 million for the very first time.
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It pointed at its “timely acquisition” of JEP Holdings, saying with its readily available manufacturing facilities in Singapore, JEP was able to support UMS’ strong customer order flows.
This alleviated the production challenges faced in its Penang campus due to the manpower crunch in Malaysia during 2021.
Gross margins in FY2021 remained stable at 52.8% compared to 53.3% in FY2020.
More importantly, UMS highlights, the record profit performance was achieved despite higher expenses. Employee costs, depreciation and other expenses went up 82%, 61% and 46% respectively.
Income tax expense also jumped 739% in FY2021 due to higher profits, as well as higher tax provisions for UMS’ Malaysian entities, which did not benefit from incentives enjoyed previously.
Elaborating on the segments, UMS also says sales in all of its core business segments grew substantially, with semicon sales going up 59% while revenue in the “others” segment leapt 63%.
UMS pointed out that sales in all of its key geographical markets grew significantly in FY2021, with the “others” segment leading the way with a 480% y-o-y.
Malaysia recorded a revenue increase of 181% while sales in Singapore, US and Taiwan rose 69%, 44% and 16% respectively.
Strong outlook ahead
In its outlook, UMS says its order forecasts remain strong as its key customer has recently given positive guidance for FY2022.
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“The strong momentum for its semiconductor systems continue to increase and it expects this strength to sustain into 2022.”
The company thinks that new smart devices and innovative tech solutions as well as Artificial Intelligence ("AI") are lifting computing power to new heights.
Digital acceleration of global economies arising from the ongoing virus pandemic will continue to step up chip production worldwide.
According to industry association SEMI, the global total semiconductor manufacturing equipment market will expand to $114 billion by 2022.
Both the front-end and back-end semiconductor equipment segments are contributing to the global expansion, it says
The wafer fab equipment segment, which includes wafer processing, fab facilities, and mask/reticle equipment, is projected to expand 43.8% to a new industry record of $88 billion in 2021, followed by a 12.4% increase in 2022 to about $99 billion.
Total semiconductor sales are expected to grow 11% in 2022 to reach another record high of US$680.6 billion, according to IC Insights.
With UMS’ new Penang factory scheduled for completion by end 2022, the company is well-positioned to take on new orders from potential new customers which are expanding in Southeast Asia, says UMS chairman and CEO Andy Luong
Luong adds, “Going forward, in addition to the strong semiconductor market outlook, UMS is also well-poised to tap post-pandemic growth opportunities - especially in the potential upswing in the aviation sector. JEP with its established track record in the aerospace industry stands to gain from the gradual aviation industry recovery."
The global aerospace market is expected to grow from US$328 billion in 2021 to $430.9 billion in 2025 at a rate of about 7%.
It is forecast to expand further at a CAGR of 5.9% from 2025, reaching $573.6 billion in 2030.
As such, OEM production rates are expected to ramp up, especially for narrow-body aircraft, according to Deloitte.
A broader global distribution of vaccines in 2022 should lead to higher levels of international travel as restrictions are eased and lifted, which should translate into higher demand for new wide-body aircraft and some new large orders from airlines.
Shares of UMS closed at $1.20 on Feb 28, down two cents or 1.6% lower than its previous close.
