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Micro-Mechanics reports 16.1% jump in FY2018 net profit to S$17.1 million on stronger sales

STRONGER sales in major markets made for a bumper year at Micro-Mechanics Holdings, with the chip component maker reporting "a record performance" in unaudited results released on Saturday.

Net profit came in at S$17.1 million for the 12 months to June 30, up by 16.1 per cent on the year before, as revenue climbed by 13.8 per cent year on year to S$65.1 million.

China remained the main contributor to the top line, at 27.5 per cent of group revenue, with sales of S$18 million. Meanwhile, the United States powered into second place, contributing S$12.2 million in revenue on a 33.3 per cent jump in sales, while revenue from Malaysia edged up by 2.3 per cent to S$12.1 million.

Earnings per share rose to 12.33 Singapore cents, from 10.62 Singapore cents previously, while net asset value was 43.37 Singapore cents a share, against 39.39 Singapore cents the year before.

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"As China continues to develop into a major centre for global chip manufacturing, the group remains focused on strengthening the operations in Suzhou to ensure fast, effective and local support to our customers," chief executive Christopher Borch said in the company's outlook statement. "As a result, the group has benefited from multi-year sales growth in China."

The company noted that it occupies "a sound financial position", with its balance sheet recording cash and cash equivalents of S$21.1 million, and no bank borrowings. 

Industry figures have guided for easing semiconductor growth worldwide, but Micro-Mechanics noted: "Because the tools and parts we manufacture are typically purchased by our customers well before the sale of the finished chip is recorded, the group's revenue growth generally tends to reflect the future direction of the semiconductor industry."

Mr Borch added: "As such cyclicality is typical for the semiconductor industry, our approach is to focus on its long-term trends and not to get preoccupied by short-term variations. We continue to believe the semiconductor industry is poised for a prolonged period of solid growth as chips are becoming increasingly embedded in nearly every aspect of modern life, from today's smartphones to tomorrow's driverless cars. Hence, the key to the group's success lies in our continuing ability to seize long-term opportunities and correctly identify the initiatives and investments that bring value to our customers."

The directors have recommended a final dividend of five Singapore cents share and a special dividend of one Singapore cent a share. This would take the payout for the full year to 10 Singapore cents, up from eight Singapore cents the year before.

Micro-Mechanics closed at S$1.82 on Aug 23.