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3 Semiconductor Stocks To Buy for the Tech Boom

by James Yeo // November 26, 2020  

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Many Singapore investors are hyped up about the IPO of Nanofilm as it has been awhile since there was a tech listing in SGX. Furthermore, Nanofilm's listing is highly anticipated with many big names as its cornerstone investors such as Temasek Holdings. That being said, SGX still has many notable technology stocks even in the small cap space. We have scoured the market and has found 3 small-cap technology stocks you may be interested in.

#1 Avi-Tech Electronics Limited

Avi-Tech Electronics Limited is a  provider for burn-in, manufacturing and printed circuit board assembly and engineering services for the semiconductor, electronics, life sciences and other emerging industries. It also provide robotics solutions with powerful navigation and intelligent fleet management software for use in a wide range of applications including manufacturing, logistics, healthcare, hospitality and other industries. As of its latest annual report, Avi’s revenue decreased by 12.5% to $ 29.4 million. Its net profit however increased by an outstanding 28.5% to $5.96 million. Free cash flow was at a healthy level of $8.93 million. As a result, cash balance of the company was at a level of $10.6 million. Avi's revenue took a hit likely due to COVID effects at the start of the year. It was clear that management worked prudently and have implemented cost savings measure. The management has increased the margin of the products sold as well as reducing the bottom line expenses which have given them better net profit than 2019. Avi last closed at $0.42, which values it at a P/E ratio of 12.17 and dividend yield of 4.71%.

#2 Frencken Group Limited

Frencken provide comprehensive Original Design, Original Equipment and Diversified Integrated Manufacturing solutions. It has presence all across the world and boasts world-class MNCs in the automotive, analytical & life sciences and semiconductor industries as its customers. As of its latest half-yearly report, Frencken’s revenue decreased slightly by 9.6% to $292 million. Its net profit decreased by 6.1% to $18.6 million. Free cash flow still came in at a good level of $5.8 million. As a result, cash balance of the company grew to a much healthier level of $114.2 million. It is evident that COVID has impacted the company where sales dropped slightly. However, it also showed the prudence and brilliance of the management in reducing the impact on the bottom line. Even though revenue slid by 9%, net profit decreased at a much slower pace of 6%. This showed the strong capabilities of the management and also the resilience of the company in protecting its margins. Frencken last closed at $1.10 which values it at a P/E ratio of 11.17 and a dividend yield of 2.7%.

#3 UMS Holdings Limited

UMS Holdings Limited is a one-stop strategic integration partner providing equipment manufacturing and engineering services to Original Equipment Manufacturers of semiconductors and related products. The products UMS offer include modular and integration system for original semiconductor equipment manufacturing. Headquartered in Singapore, the Group has production facilities in Singapore, Malaysia and California, USA. As of its latest half-yearly report, UMS’s revenue increased by 28% to $75.2 million. Its net profit increased by an outstanding 53% to $24.3 million. Free cash flow came in at an $19.1 million. As a result, cash balance of the company came was at a very healthy level of $49.0 million. UMS has been a household name for tech investors in Singapore. It is evident from the awesome net margin of 32.3%, which is extremely rare for manufacturers. An even more amazing feat is that the company maintained its growth in revenue and net profit despite the pandemic. UMS last closed at $1.04, which values it at a trailing P/E ratio of 12.7 and dividend yield of 3.3%.
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