Gains for semiconductor plays ASTI, UMS amid active trading

Singapore

SEMICONDUCTOR firms ASTI Holdings and UMS Holdings rose on active trading on Friday, with over 11.3 million UMS shares and 10.2 million ASTI shares traded by market close.

UMS, which manufactures semiconductor components and assembles electronics, was up 6.17 per cent, or five Singapore cents, to 86 Singapore cents at the end of Friday's trading.

Shares of ASTI, which provides back-end semiconductor solutions and technology, gained 3.61 per cent, or 0.3 Singapore cent, to S$0.086.

CGS-CIMB analyst William Tng said he was not aware of any reason that could have sparked Friday's activity. He is maintaining his "add" rating on UMS as per his last call, with a target price of S$1.21. He added that the long-term outlook for both the company and the semiconductor industry remains positive.

"As for the near term, there is a bit of uncertainty over trade tensions between the US and China. We have to wait and see if those get resolved," he said.

Mr Tng's research report on UMS dated May 14 said UMS management is still confident about the company's prospects in 2018, and a potential re-rating catalyst would be better-than-expected order momentum from its major customer.

In a flash note also dated May 14, DBS analyst Carmen Tay recommended an unchanged "buy" rating on UMS with a target price of S$1.37, citing Q1 results that were in line with forecasts.

She said UMS could benefit from the double-digit growth of applied materials this year, with global semiconductor sales expected to grow by 7.5 per cent to US$60.1 billion.

Credit Suisse research analyst Johnson Loh said that with electronics products being one of the largest single product categories in Asian trade, investor sentiment has been affected by trade tensions, resulting in a higher risk premium for the sector.

However, these tensions are expected to be resolved eventually, and growth in data and the adoption of artificial intelligence in cloud and devices should drive demand for leading-edge chips and new chip architectures for high-performance computing in the long term, he said.

"We believe leading semiconductor players will be the prime beneficiaries of this trend," said Mr Loh.

"In the shorter term, players in the technology supply chain outside China could be the marginal winners as companies seek to diversify their supply chain away from China in view of the uncertainties arising from the trade tensions."