UMS Holdings

UMS Holdings: RHBOSK initiates Coverage with Buy Call and $0.71 TP. Note that in view of the impending recovery of the semiconductor industry, see UMSH as a proxy to the revival. House like its: i) close partnership with industry leader Applied Materials, ii) stable cash flow that provides attractive sustainable dividends of ~10%, and iii) potential share price jump. Note that UMSH boasts a solid track record for generating impressive net operating cash flows. Most notably, even at the height of the 2009 financial crisis, it recorded positive operating cash flow despite suffering a loss in earnings. Factoring in its current financial strength (net cash of $26.4m as at end-1QFY13) into consideration, believe there is no problem for the Group to sustain its generous payout, which translates to an attractive average annual yield of ~10%.