UMS' 3Q profit up 4.9% to $6.8m

But full-year profit could plunge 40%.

UMS holds steady in 3Q, as earnings grow 4.9% q-o-q to S$6.8m

Both UMS' core components manufacturing and assembly businesses saw better traction during the quarter, which led to a 10.5% q-o-q growth in group revenue to S$26.1m in 3Q.

Meanwhile, net margins came off slightly, from 27.4% in 2Q to 26% in 3Q, mainly as growth from the lower-margin assembly business outpaced that of contract manufacturing, and on higher bonus provisions during the quarter, similar to that in previous years.

Helped by an exchange gain of S$0.7m, 3Q net profit grew 4.9% q-o-q to S$6.8m.

DBS Vickers Securities however cautioned that in light of the current industry down-cycle, demand for semiconductor manufacturing equipment will likely be flat.

It adds that as orders from UMS’ key client have yet to pick up, the research house expects revenues to decline by 18% to c. S$91m in FY16F, and earnings to fall by almost 40% y-o-y to hit a trough of c. S$20.7m in FY16F, partly as margins should normalise from FY15 levels, helped by a stronger USD and low oil prices.