Micro-Mechanics Holdings Ltd - DBS Research 2019-11-29: Revving The Machine

MICRO-MECHANICS (HOLDINGS) LTD (SGX:5DD) | SGinvestors.io MICRO-MECHANICS (HOLDINGS) LTD (SGX:5DD)

Micro-Mechanics Holdings Ltd - Revving The Machine

  • Major beneficiary of bottoming semiconductor industry.
  • Relatively low risk counter with no debt and strong cash flow generating ability.
  • Attractive dividend yield of c.5.6%.



Micro-Mechanics - The Business


Semiconductor equipment components maker.


Potential turnaround ahead coupled with structural industry changes.

  • The semiconductor industry appears to be reaching the tail end of the downcycle. This combined with technological advancements such as the Internet of Things, cloud data storage and a transition to 10-nanometer and below geometries should drive demand for Micro-Mechanics’s components and tools going forward.

Zero debt; high operating cash flows.

  • Micro-Mechanics has no borrowings, enabling the group to weather downturns better than most. In addition, the group is able to generate strong cash flows, enabling it to fully fund capital expenditure even during a slowdown to boost production quickly when the cyclical semiconductor industry rebounds.


Micro-Mechanics - The Stock


Fair value of S$2.13.


Potential Catalysts:

  • Formal end to US-China trade war; higher dividend payouts; M&A activity.

Potential risks:

  • Resurgence of US-China trade war which could dampen manufacturing confidence; sudden downturn in semiconductor industry.

See attached PDF report for complete analysis.






Lee Keng LING DBS Group Research | Singapore Research Team DBS Research | https://www.dbsvickers.com/ 2019-11-29
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 2.13 SAME 2.13



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