UMS

UMS: Maybank-KE has an unrated report. The house likes UMS for its high dividend per share of 5cts (FY13: 3cts, FY10-12: 5cts), which translates to 8.5% yield. UMS’s share price has seen a gradual re-rating in the past few years after it commenced its OEM business with key customer Applied Materials in 2012. Net margins already exceed 20% even with low utilization rate of 60-70%. Higher utilization on more volume from Applied Materials and new business could boost margins, enhancing cash flow further and its ability to pay dividends. MBKE believes 2014 looks set to be a better year and the company may reinstate its special dividend (est. 1ct) as early as 2013, boosting dividend to beyond 10% at the current share price.