Category: UMS

Buy @ $0.71, $0.705, $0.695, $0.69, $0.685, $0.68, $0.66

xbi today.

• Vol = 15,131,000
• Range = $0.66 to $0.76
• Close = $0.66

Based on theorectical xbi price = $0.724, a drop of 8.8% at $0.66 close. The sell down was fierce and relentless… Most likely, CEO is responsible (CP = UOBKH) plus possibly AMAT (CP = Morgan Stanley), wait for SGX confirmation.

Very scary… reminds me of REITs 1st day listing a long time ago…

To check on the above possibility, the tabulated CEO sales over the past years.

Observations,

• CEO sales started from 2012
  • Twice per year on consecutive days (2-Mar-13 & 3-Mar-13 are weekends)
  • In Mar for ’13 & ’14 ; Apr for ’12
  • Already sold for 2014!

So, if the same pattern is maintained this year, it may not be CEO selling today. My fingers now point towards AMAT. It’d also explain that tiny sale on 2-Jun followed by a possibly full divestment. If that’s the case, we may see continued selling for at least one more day. For their recent sale, AMAT only reported 2 days later. So, we may not know till next Monday.

Nevertheless, if we focus on the fundamentals, at $0.66,

• PE = 9.82 (FY13) or 8.81 (latest 4Qs)
• Yield = 7.879% (incl. Special Div) or 6.061% (excl Special Div)
• Cash = 11.49ct / share -> 9.2ct / share (Enlarged Base from Bonus Issue)

Fundamentally, looks ok… unless there’s fraud, like S-Chips…

I sill have enough in my warchest for further buys… although the experience today was not very good for the heart, to see it under continuous attack and prices getting lower and lower… 😀

Most of my today’s buys were done in a separate account, so that I can contra off at a lower price  if it were to rebound… So, I remain flexible to either buy or sell depending on price…

Buy @ $0.915, $0.895

Last day of cbi. Came under selling pressure (same selling pattern as yesterday, likely same responsible group) and dropped to intraday low of $0.885,

• Range = $0.885 to $0.93
• Vol = 2,876,000
• Close = $0.91

For tomorrow, the xbi computation,

Note : Bonus share also cd for Div = 1ct (xd on 11-Jul).

Am prepared to buy more on dips… 😀

After mkt closed, there was an SGX Annc that AMAT had sold 193,000 shares on 2-Jun @ Avg Price = 95.37ct, which reduced their sake from 6% to 5.95%.

Hmm… for a large co. like AMAT, I wonder why they need the $184k proceeds.. ?? A couple of possibilities,

• AMAT continue to sell yesterday and today, causing the share price to drop (will know from SGX Annc soon)
• Insiders decided to play safe after getting hold of AMAT sales info

If AMAT continues to sell and reduce their stake in UMS, it'd be a negative to me… Still, AMAT and UMS had just signed a 5-yr agreement (according to Maybank report dated Jan-14, refer to FB 'Investment' Page) for 80% of their Endura equipments… Should be ok, unless Endura is going obsolete… More homework to do!

Buy @ $0.905

Woah… KK must have gone crazy… buying at such a new high price… 😀

Let's look at the following,

• Industry
  • Cycle remains positive and forecasted to stay positive into 2015 but note that things can change anytime ie. Need to follow up closely on Industry News
  • Reference : Gartner Says Worldwide Semiconductor Capital Equipment Spending to Increase 12.2 Percent in 2014 dated 24 Apr 14
• AMAT (Applied Materials)
  • From the quarterly results, AMAT Order Book has been increasing since Q4 FY2013

• This bodes well for UMS as AMAT is their main customer and there's a strong correlation between their business
• Reference : Maybank Report dated 20 Jan 14

Comments

• AMAT guidance for Q314 (Jul) is Revenue Flat to -5% but for UMS, their Q214 (Jun) is expected to continue on a robust trajectory
  • Sounds conflicting but it should give a good indication that UMS Q214 Revenue will not be much worse than Q114
  • On the optimistic side, UMS Revenue may see an increase
• Industry cycle is positive at the moment
  • Projected to stay positive till 2015 but have to follow closely
• AMAT gained market share
  • Positive for UMS
  • Bigger gains in 2H14 from the merger with Tokyo Electron but this may or may not translate to bigger business for UMS

Conclusions

• Take a bet at current prices ($0.905) but may be short term as I already have a large holding
  • PE = 10.77 (FY13) or 9.67 (latest 4Qs)
  • Yield = 7.182% (5.525% if Exclude Special Div)
• Highly cyclical industry which can turn anytime, depending on the economy
  • Need to stay vigilant, not meant to buy and hold forever

Buy @ $0.815

1st day of xd (3.5ct) and hit my target price of 81.5ct (Yesterday's Close = 85.5ct Less 3.5ct Div => 82ct). 😀

Buy @ $0.855

Last day of cd, will be collecting lots of 3.5ct div on 28-May. Based on Neratel drop today (xd today), if it follows the same pattern tomorrow, it ought to drop more than 3.5ct for a while before recovering. My target buy price is <82ct tomorrow ie. 81.5ct and below. I don't think we have many days before they release Q1 results (on the 9th last year), after which, prices may be better supported by a new Quarterly Div (1ct last year) or CEO Blackout will be over and may come out to sell cheaply…  😀

Buy @ $0.855

Jump-Q before mkt opened. Getting cheaper as we approach xd on 6-May. Last 2 trading days of cd. My Crystal Ball better be right on the Semiconductor Fab Equipment positive cycle staying positive till Q3 or even longer…:D

Buy @ $0.87, $0.865

Started out buying from Sell Q @ $0.87 but towards the afternoon, there were lots of selling @ $0.865 and some at $0.86. Buy till scared and decided to hold back to reserve some buying power for critical dates like xd (6-May) in case prices drop further… 😀

Buy @ $0.87

My highest buy price… AGM today, afraid they may leak out good news, grab more first… 😀

I did a compilation of the semi.org Billings figures on a quarterly basis and computed the q-o-q change to compare with UMS Revenue & EPS figures,

The Industry wide figures ought to provide us with a good picture on the state of the Industry cycle…. which is still +ve… The big jump in UMS Revenue & EPS in Q413 (when compared against WW Billings %) could be due to a timing lag as we see UMS figures for Q313 (1 Q earlier) was a much bigger drop vs WW Billing % Change. For other Qs, similar possible timing leads or lags may also be present…

There's a very high chance UMS will report a Q114 with higher Revenue. EPS will be a different matter as for Q413, there was a big jump and one of the contributing factors was lower Depreciation Expenses. A ball park estimate using Q413 & Q313 average and applying a +5% gives EPS = 2.41ct -> My Crystal Ball figure… I hope to see a higher EPS, at least > 2.5ct … The dream EPS would be at least 3ct or even higher than Q413 3.14ct…

Critical Dates

• 6-May (Tue) : xd for 3.5ct

• 9-May (Fri) : Q114 Results?

Buy @ $0.845

Jump Q to grab some when mkt open but was still able to buy more at the same price after mkt opened.

BB (Billing-Booking) data for Semicon Eqpt was released by semi-org at 6am. It's just above my expectation (0.95 – 1.05) @ 1.06. But, both 'B's are actually lower than last month, with Billing drop steeper than Booking, thus the higher BB. Still, the drops are not substantial and more importantly, it's much higher y-o-y.

It's now my No.1 stock after my recent buying plus my selling down of my Neratel holdings… 😀

Reference :  http://semi.org/en/node/49576?id=highlights

Buy @ $0.86, $0.855, $0.85, $0.845

Ok, I went crazy and bought at even higher prices… even went to Jump-Q before mkt open to grab some at $0.86. Reading thro' some articles of Semicon Fab Eqpt FORECAST for 2014 of +20-30% made me reckless… Coupled with PE = 10+ and Yield just <6% (if no Special Div) gave me a false (?) sense of safety…

Some articles also mentioned that Fab construction leads Fab Eqpt orders and well… since many Fabs already started construction in 2013 (based on semicon demand forecast, CAPEX already committed), I don't suppose they'll be left empty unless there's a severe downturn or mistake in the semicon demand forecast???

This batch of Buys can also be short term…

Good Luck to me… 😀

PS. Andy Luong (CEO) is unlikely to be behind the sell down today as it's likely the Blackout period now (Last year, Q1 results on 9-May). Semicon.org will release Mar-14 BB tomorrow 6am… perhaps profit taking due to fears of drop in BB to below 1?? My prediction is +/- 0.05 ie. 0.95 to 1.05, with a higher chance of a positive bias… I hope!

References :

• Fab equipment spending to increase 20-30% in 2014 by Solid State Technology dated Mar-14

• Gartner : Says Worldwide Semiconductor Capital Equipment Spending to Increase 12.2 Percent in 2014 by 4-traders dated Apr-14
• UMS AR2103