micro-mechanics 2q16 presentation - 29 jan...

1H 2016 Results BriefingSix months ended 31 Dec 2015

MICRO-MECHANICS (HOLDINGS) LTD.

FIRST HALFFY201629 January 2016

AGENDACorporate ReviewFinancial ReviewQ&A

3MICRO-MECHANICS (HOLDINGS) LTD.

CHRIS BORCH, CEOLOW MING WAH, COO

CORPORATEREVIEW


Global Monthly Chip Sales (US$ B)

Semiconductor Industry Landscape

-10%

-5%

0%

5%

10%

15%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0YOY Growth

Slowdown in demand conditions

• Global chip sales slowed from July 2015

• Cumulative sales for July to Nov 2015 were around 2% lower than the same period in 2014

Source: Semiconductor Industry Association


Semiconductor Industry Landscape

• WSTS expects the world semiconductor market to show flattish growth of 0.2% to $336 billion in 2015

• Growth in Asia-Pac to be offset by declines in Americas, Europe and Japan

• Expect moderate growth in 2016 and 2017

Source: WSTS

WSTS Semiconductor Market Forecast Autumn 2015 – World Semiconductor Market (US$ M)

335,843 336,392 341,011351,596

2014 2015F 2016F 2017F

0.2% 1.4% 3.1%


Group Strategy

Perfect Parts and Tools, On Time,

Every Time

Customer Value

Stakeholder Returns

Governance, Transparency

ORGANISATION GOALS

KEY OPERATING STRATEGIES

Research and DevelopmentProduct, Material and Process

Customer SupportFast, Effective and Local

24/7 MachiningRepeatable, Scalable, Cost-Effective

MMUniversityHuman Capital Development

• Established Applications and Process Engineering (“APE”) Centre in Singapore

• Established R&D Center for Materials and Fine-Machining in Singapore

• Developed 24/7 Machining and designated USA subsidiary as Corporate Center for Machining Excellence

• Implemented Enterprise Resource Planning

• Established MMUniversity

• Established Applications and Process Engineering (“APE”) Centre in Singapore

• Established R&D Center for Materials and Fine-Machining in Singapore

• Developed 24/7 Machining and designated USA subsidiary as Corporate Center for Machining Excellence

• Implemented Enterprise Resource Planning

• Established MMUniversity

‘MICRO” TOOLS FOR SEMICONDUCTORS | CUSTOM MACHINING & ASSEMBLY


Key Metrics – 1H16

SALES PRODUCTIVITY \ PROFITABILITYBALANCE

SHEETGOVERNANCE

Revenue was flat yoy amid weaker industry conditions

Gross profit margin up to 56.6% (1H15 : 53.8%)

Net profit up15.5%

Tight rein on operating expenses

Zeroborrowings

Healthy cash flows –S$16.6M cash balance

Ranked 18th out of 639 SGX-listed companies on the Governance Transparency Index (GTI) published on 18 Aug 2015

Group headcount: Net profit margin up to 24.5% (1H15 : 21.1%)

Tight control of trade receivables and inventory

Strong capital structure to support future growth

601

431

July 12

Dec 15


2.0

0.81.2

2.4

3.5

5.0 5.0

2.0

3.0 3.0 3.0 3.0 3.0

5.0

Special dividend

Final dividend

Interim dividend

Dividend per share (cents)

TOTAL DIVIDENDS OF 41.9 CENTS PER SHARE SINCE LISTING

Interim Dividend for 1H16

DIVIDEND POLICY TO PAY NOT LESS THAN 40% OF CONSOLIDATED NET PROFIT


CHOW KAM WING, CFOFINANCIAL REVIEW


1H16 in Review

25.8

14.6

0

8.16.3

11.2

0.5

7.0

1.8

1H16 P&L Overview (S$ million) KEY RATIOS & STATISTICS

REVENUE GROWTH (0.5%)

GROSS PROFIT GROWTH 4.7%

NET PROFIT GROWTH 15.5%

GROSS PROFIT MARGIN 56.6%

NET PROFIT MARGIN 24.5%

EARNINGS PER SHARE 4.54 cents

RETURN ON EQUITY (annualised) 26.3%

CASH S$16.6M

DEBT Zero


11.7 10.4 9.9 11.1 13.0 13.6

11.48.7 9.3

10.512.9 12.2

11.1

9.4 9.210.6

13.4

11.1

10.3 10.811.7

12.9

80

130

180

230

280

330

0

10

20

30

40

50

60

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

4Q

3Q

2Q

1Q

45.3

38.8 39.2

Group Revenue (S$ mil)

Global Chip Sales Trend (US$B)

1Q16 : +4.3% | 2Q16 : -5.5% | 1H16 : -0.5%

37.032.5 33.8 36.7

44.7

22.5 22.8

8.3

6.3 5.47.2

7.5

3.4 3.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

FY2011 FY2012 FY2013 FY2014 FY2015 1H15 1H16

CMA

SemiconductorTooling

Revenue Drivers

Global Chip Sales Trend according to FY. Data from Semiconductor Industry Association (SIA)

43.9

Group Revenue

52.2

FY: Financial year ending 30 June

25.8


9.6 8.8 8.6 9.4 11.3 12.0

9.5 7.4 8.1 8.711.2 10.8

9.07.7 7.8 8.7

11.38.9

8.6 9.39.9

10.9

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

4Q

3Q

2Q

1Q

37.032.5 33.8

(S$ mil)

2.0 1.6 1.3 1.7 1.7 1.6

2.01.4 1.2

1.8 1.7 1.4

2.11.6 1.5

2.0 2.1

2.2

1.71.4

1.7 2.0

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

8.3

6.35.4

Semiconductor Tooling CMA(S$ mil)

0% 20% 40% 60% 80% 100%

FY2011FY2012FY2013FY2014FY2015

1H16

Semiconductor Tooling CMA

Percentage of Revenue

36.7

7.2

Quarterly Revenue By Business Segments

44.7

3.0

22.87.5


DIVERSIFIED REVENUE STREAMS

Revenue by Geographical Market

Singapore, 5%

Malaysia, 20%

China, 30%

Thailand, 2%

Philippines, 9%

USA, 14%

Europe, 5% Japan, 2% Taiwan, 10%

Rest of world, 3%

Sales Breakdown for 1H16

MAJOR MARKETS FOR SEMICONDUCTOR

TOOLING

KEY MARKET FOR CMA

Country1H16 1H15

% changeS$ mil S$ mil

Singapore 1.4 1.7 (15.5%)Malaysia 5.2 5.7 (9.3%)Philippines 2.4 2.2 7.5%Thailand 0.5 0.8 (39.0%)China 7.7 6.7 14.2%USA 3.5 3.7 (2.5%)Europe 1.3 1.1 13.8%Japan 0.5 0.5 (10.7%)Taiwan 2.6 2.6 2.0%

Rest of world

0.7 0.9 (23.4%)

Total 25.8 25.9 (0.5%)

Sales in China grew despite slowdown in semiconductor industry

Higher sales volume in Malaysia offset by depreciation of the Ringgit


46.3%

49.1%

50.7%

55.0%

52.9%

54.7%

57.3%

56.6%

0% 20% 40% 60% 80%

FY2012

FY2013

FY2014

FY2015

1Q15

2Q15

1Q16

2Q16

Group GPM

53.4%

55.8%

56.0%

62.6%

59.8%

61.8%

63.8%

62.1%

9.7%

6.3%

23.2%

14.2%

6.3%

9.6%

10.7%

6.7%

0% 20% 40% 60% 80%

FY2012

FY2013

FY2014

FY2015

1Q15

2Q15

1Q16

2Q16

CMA

Semiconductortooling

GPM by Business Segments

Expansion of GP margin in 1H16 attributed to implementation of 24/7 Machining and other strategies that have raised productivity, improved operating efficiency and reduced production costs

STEADY MARGIN EXPANSION YOYGross Profit Margin


1Q16 : +28.4% | 2Q16 : +1.9% | 1H16 : +15.5%

2.0 1.2 1.2 2.1 2.8 3.61.8

0.7 1.01.4

2.72.71.6

0.91.4

1.8

3.7

1.4

1.41.5

2.4

2.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

4Q

3Q

2Q

1Q

6.8

4.25.1

(S$ mil) Net Profit After Tax

26.8%

31.4%

31.4%

28.5%

25.5%

25.0%

0% 10% 20% 30% 40%

FY2011

FY2012

FY2013

FY2014

FY2015

1H16

Operating Expenses - Administrative, distribution and other operating expenses (inclusive of other income)

Operating Expenses / Revenue

Admin, Distribution and Other Operating expenses (net of other income) held steady at S$6.5M in 1H16, compared to S$6.6M in 1H15

Although revenue was flat, net profit was higher in 1H16 – attributed mainly to increased GPM and tight control of expenses.

7.7

Group Net Profit

12.0

6.3


8.7 8.9 8.8

10.8

14.1

7.7

0

2

4

6

8

10

12

14

16

FY2011 FY2012 FY2013 FY2014 FY2015 1H16

(S$ mil)

6.7 6.5

2.6

6.64.9

1.1

5.5

0

2

4

6

8

10

12

14

16

FY2011 FY2012 FY2013 FY2014 FY2015 1H16

(S$ mil)Track record of healthy net cash

from operating activities CAPEX

Net Cash from Operating Activities and CAPEX

Planned Capex for FY2016 S$6.6M


31 December 2015 30 June 2015

Cash Cash and cash equivalents S$16.6# S$15.2

Gearing Total borrowings Nil Nil

Trade Receivables

Trade Receivables(Outstanding > 90days) / (Total trade receivables)Bad debt expense

S$9.0M0.8%

S$11.5k (1H16)

S$9.2M0.3%

S$1.2k (FY15)

Inventory InventoryInventory / Sales Inventory write-off

S$3.2M6.3%

S$38k (1H16)

S$3.5M6.7%

S$104k (FY15)

Equity Shareholders’ equityNAV per share

S$48.0M#

34.52 centsS$46.9M

33.72 cents

# Paid dividends of S$4.2M (Final and special dividends for FY2015)

Balance Sheet


CHRIS BORCH, CEOLOW MING WAH, COO

KEY TAKEAWAYS


• Delivered profit growth despite weaker market conditions

• Expansion of GP margin, the result of improved operational efficiency and productivity gains

• Maintain interim dividend of 2.0 cents per share for 1H16

• Markets remain unpredictable and cost-competitive Global chip sales for 2015 expected to be flat with modest growth expected for 2016

• Continue to focus on enhancing our value for customers to grow our top line & sustain growth over long-term

• Aim to deliver consistent returns to our shareholders

Key Takeaways


This presentation contains certain statements that are not statements of historical fact, i.e. forward-lookingstatements. Investors can identify some of these statements by forward-looking items such as ‘expect’, ‘believe’,‘plan’, ‘intend’, ‘estimate’, ‘anticipate’, ‘may’, ‘will’, ‘would’, and ‘could’ or similar words. However, you should note thatthese words are not the exclusive means of identifying forward-looking statements. These forward-looking statementsare based on current expectations, projections and assumptions about future events. Although Micro-Mechanics(Holdings) Ltd. believes that these expectations, projections, and assumptions are reasonable, these forward-lookingstatements are subject to the risks (whether known or unknown), uncertainties and assumptions about Micro-Mechanics (Holdings) Ltd. and its business operations.

Some of the key factors that could cause such differences are, among others, the following:• changes in the political, social and economic conditions and regulatory environment in the jurisdictions where weconduct business or expect to conduct business;• the risk that we may be unable to realise our anticipated growth strategies and expected internal growth;• changes in and new developments in technologies and trends;• changes in currency exchange rates;• changes in customer preferences and needs;• changes in competitive conditions in the semiconductor industry and our ability to compete under these conditions;• changes in pricing for our products; and• changes in our future capital needs and the availability of financing and capital to fund these needs.

Given these risks, uncertainties and assumptions, the forward-looking events referred to in this presentation may notoccur and actual results may differ materially from those expressly or impliedly anticipated in these forward-lookingstatements. Investors are advised not to place undue reliance on these forward-looking statements.

Investors should assume that the information in this presentation is accurate only as of the date it is issued. Micro-Mechanics (Holdings) Ltd.’s business, financial conditions, results of operations and prospects may have changedsince that day. Micro-Mechanics (Holdings) Ltd. has no obligation to update or revise any forward-looking statement,whether as a result of new information, future events or otherwise, except as required by law.

Safe Harbour for Forward-Looking Statements

31 Kaki Bukit PlaceEunos Techpark

Singapore 416209www.micro-mechanics.com

Octant ConsultingTel (65) 6296 3583

[email protected] [email protected]

MICRO-MECHANICS (HOLDINGS) LTD.

Investor Relations Contact

Micro-Mechanics (Holdings) Ltd.

micro-mechanics 2q16 presentation - 29 jan...

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