UMS Holdings

“We are bullish on the semiconductor sector for 2020 as globally, we have seen semicon players reporting good earnings thus far, [giving them] a good outlook,” says RHB analyst Jarick Seet.

Maybank Kim Eng Research analyst Lai Gene Lih says that stocks such as UMS Holdings and AEM Holdings are not only unlikely to face disruptions from the Covid-19 pandemic, but are also poised to thrive on strong outlooks from their key customers.

On the back of improved performance, UMS is proposing a 1.0 cent tax-exempt interim dividend that is slated to be paid out on July 28. This dividend is also double that of the 0.5 cent dividend paid out last year.

AEM Holdings surged 19.4% to close at $3.08 on May 8, after the company raised its revenue guidance and a flurry of analysts’ upgrades followed.

“Semiconductors serve as the backbone to all things tech. Hence, we remain fairly confident for the industry,” KGI analyst Kenny Tan tells The Edge Singapore.

Maybank analyst Lai Gene Lih identifies AEM Holdings to be the brokerage’s top tech sector pick, while remaining positive on UMS Holdings and Valuetronics. In contrast, the brokerage has downgraded Venture Corp and Hi-P International to "sell".

"As our key clients are major global semiconductor equipment manufacturers, we believe that we are poised to gain from the technology revolution."

“Our thesis that UMS is a beneficiary of the upswing in semiconductor capex, which is still in the early stages, appears playing out,” says Maybank Kim Eng analyst Lai Gene Lih.

The shift to a product mix with higher concentration in semiconductor system integrated sales had resulted in lower margins for the group.

Signs of a broader recovery in the global economy have led equity markets higher but yields and valuations of Singapore stocks continue to be attractive. Here's The Edge Singapore annual pick of 10 stocks to help you usher in a more prosperous Lunar N