UMS

UMS: CEO Luong Andy continues to pare down his stake from 21.99% to 20.25% through market transactions, disposing 6m shares at $0.6257 apiece Following the recent stake sell by key customer – Applied Materials, and UMS CEO, we highlight that the only two local broker who actively covers the stock have since downgraded it to sell, guiding that the latest stake sale could suggests a lack of confidence in the sustainability of the group’s margins going forward, and further downward pressure on its earnings. Furthermore, the cessation of Applied Materials (accounts for ~80% of UMS' revenue) as a substantial shareholder would inherently raise concerns over the renewal of a profitable contract between UMS shares and Applied Materials, which expires in 2017. UMS currently trades at 8.6x forward P/E and a forward yield of 8.8%. Overall, the street has 2 Sell call ratings with a consensus TP of $0.46.