Brokers' take

UMS Holdings | Hold Target price: S$0.86 Aug 28 close: S$0.785 DBS Group Research, Aug 27

We downgrade UMS Holdings to "hold" with a lower target price of S$0.86 as key client Applied Materials' (AMAT) disappointing sales outlook may have negative implications for UMS over the near-term. During its recent Q3 2018 results, AMAT gave a disappointing sales outlook, which could directly impact UMS's Endura business (which contributes around 50 per cent of top-line, on average) over the near term and give rise to a weaker H2 2018 versus H1 2018.

Notwithstanding fluctuations in near-term operating performance - which are typical of semiconductor-related stocks, the vast application potential of chips is set to drive robust demand growth for semiconductor equipment over the medium-to-long term.