Maybank Securities (Maybank) analyst Jarick Seet sees UMS Integration&rsquo s (UMS) listing on Bursa Malaysia as a &ldquo positive catalyst&rdquo , expecting the stock&rsquo s valuations to be &ldquo lifted&rdquo closer to its Malaysian peers&rsquo trading at an average of around 25 times to 35 times price-to-earnings ratio (P/E).

 

He writes in his July 21 report: &ldquo We expect the Malaysian secondary listing to boost its valuations as Malaysian peers are trading at a much higher valuation as compared to UMS in Singapore and the quality of UMS&rsquo s business and its margins are superior to those of many of its Malaysian peers.&rdquo

 

With this, Seet has kept his &ldquo buy&rdquo call on UMS at a higher target price (TP) of $1.59 from $1.19 previously.

 

He writes: &ldquo We also expect upcoming 1H2025 results to improve as revenue from its existing customers should grow slightly y-o-y.&rdquo

 

In the 1QFY2025 ended March, Malaysia revenue surged 287% y-o-y to $9.4 million from $2.4 million in the same period a year before, largely due to the production ramp up of semiconductor components for the new major customer.

 

Come the end of FY2025, UMS&rsquo s management expects to hit a revenue of $1.5 million weekly, notes Seet.

 

He writes: &ldquo It is currently at a $600,000 to $650,000 a week run rate. In addition, orders from its existing customer should increase slightly for FY2025. All in all, we expect revenue to improve q-o-q from 2QFY2025 onwards.&rdquo

 

Overall, the analyst sees that earnings have &ldquo likely bottomed&rdquo in the FY2024 and &ldquo should improve&rdquo in the years ahead, with profitability improving q-o-q as UMS&rsquo s new major customer commences production.

 

For the first quarter, management declared a dividend of one cent a share.

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Upsides noted by Seet include stronger-than-expected revenue momentum following capacity expansion in the FY2022, better-than-expected contributions from subsidiaries Kalf Engineering, Starke and JEP, as well as better-than-expected costs control, which in turn supports margins.

 

Conversely, downsides include higher-than-expected labour costs, difficulties expanding workforce, lower-than-expected margins and finally, lower-than-expected dividends which may &ldquo spook&rdquo yield investors.