Memtech International

Website
http://www.memtechchina.com/en/index.aspx

Financial Highlight

Share Price $0.115
EPS (for the 9 month of FY10) 0.91 cents
NAV 20.5 Cents
Netcash $38.8 Millions $ US ~ Sing 6.5 cents (no debt)

http://www.memtechchina.com/en/investor....&MyLink=65

Business

In business of manufacturing mobile phone keypad and now touch screen. Key customers are Chinese mobile phone manufacture and supplying parts for Kindle, Ebooks.

Business has turned around with profit 500% higher than last year for 09 month, improved profit margin and company expect sales for Q4 2010 to remain strong, particularly in the keypad business.

The company listed in 2005 and has been paying quote good dividend (last year 0.75 cent even through they did not make good money)

I do not have much information on the company management except that the Exec Chairman is a seasoned Taiwaness industry expert

Wow...thats a lot of cash compared to its market cap !

I believe this is one of the companies where "lark" was a substantial shareholder and mentioned they give good stable returns. Unfortunately, its share price got hit during the last down-turn and has not recovered.

I own a few lots and every year they send shareholders some token (key chain wallets etc) with annual report. While some of us may not find them useful, I find this is one company that bothers to send such tokens. Perhaps this can be interpreted positively as management's own way of its regards for all shareholders (harking to the reits thread discussion about care of minority share-holders by management).

(08-12-2010, 03:53 PM)mikh Wrote: I own a few lots and every year they send shareholders some token (key chain wallets etc) with annual report. While some of us may not find them useful, I find this is one company that bothers to send such tokens. Perhaps this can be interpreted positively as management's own way of its regards for all shareholders (harking to the reits thread discussion about care of minority share-holders by management).

That's interesting, I've never received any mementos from the companies I've invested in, usually just some boring looking ARs.

Took a look at the financials. Margins are razor thin for FY 2009 at 1.2%, and was 0.6% for the previous year. There is actually a very consistent and steady decline in gross margin from 2004 (40.8%) till 2009 (15.6%). This would indicate lack of pricing power (commoditized products) or that the barriers to entry are low.

Even though the Balance Sheet looks healthy and there is FCF generated each year, the decline in gross and net margins is very worrying and would prevent me from taking a serious look at the Company.

Just my 2-cents.

(08-12-2010, 09:57 PM)Musicwhiz Wrote: the decline in gross and net margins is very worrying and would prevent me from taking a serious look at the Company.

Just my 2-cents.

Yes, you are right the business is not exciting, profit margin was on the down trend for FY08 and FY09 but it has improved in FY10 with Q3 operating margin is at 10.5%. Beside the cash amount and the generous dividend is very tempting lol.

http://sbr.com.sg/manufacturing/more-new...les-us3mln

Q3/2010 Memetech Review

Memtech third quarter profit doubles to US$3mln

The company to focus on touch screen panel operations, with production of high end capacitive touch screen panels targeted to start in 2011.

Mainboard-listed Memtech International Ltd. ("Memtech"), a leading integrated component solutions provider for the mobile phone, IT equipment and automotive industries, Tuesday reported a strong set of financial results for the three months ended September 30, 2010 ("Q3 2010"). Profit attributable to shareholders doubled from US$1.5 million in the previous corresponding quarter ("Q3 2009") to US$3.0 million, according to a Memtech report.

The Group's revenue rose 9.6% from US$30.0 million in Q3 2009 to US$32.8 million in Q3 2010. This was mainly attributed to the continued growth of the major Chinese mobile phone manufacturers who are the Group's key customers, and orders to supply components for Amazon's eBook, Kindle.

Gross profit jumped 22.9% from US$5.7 million in Q3 2009 to US$7.0 million in Q3 2010, while gross profit margin improved 2.3 percentage points from 19.1% in Q3 2009 to 21.4% in the quarter under review. This was due to higher sales and better control of production cost.

Sales and marketing expenses increased 17.2% to US$1.6 million as a result of higher staff costs and travelling expenses in Q3 2010. Due to its improved credit control during the quarter, the Group made a lower provision for doubtful debt as compared to Q3 2009. This in turn led to an 8.7% decrease in general and administration expenses in Q3 2010.

For the nine months ended September 30, 2010, the Group registered revenue of US$93.8 million and profit attributable to shareholders of US$5.2 million.

The Group's financial position remained healthy as at September 30, 2010, with cash and cash equivalents of US$38.8 million.

Outlook
Executive Chairman of Memtech International Ltd., Mr Chuang Wen Fu, said, "“Looking ahead, we expect sales for our keypad business to remain strong in the fourth quarter of 2010, and contribute positively to our full year financials. We will continue to focus our business development efforts on the eBook and automobile segments."

"In recent years, the Group has also been strengthening our touch screen panel operations in anticipation of the expected market demand ahead. We are now ready to focus our efforts to tap the rapid market expansion for touch screen panel electronic products. To scale up the value chain, we target to commence the production of high end capacitive touch screen panels in mid 2011," Mr Chuang added.

While the Group is optimistic about its prospects, challenges including higher inflation, rising labor costs in China and the depreciation of the US dollar are expected to remain. As such, the Group has taken measures to ensure a stable workforce, enhance its operational efficiency, as well as minimize the impact arising from exchange rate fluctuations.

Today, Memtech bought back total of 1 millions shares: 825,000 shares at $ 0.13 and 175, 000 share at $ 0.135. Since after Q3 Result Announcement, the company has bought back aggressively 2,459,000 shares. That sends the message that the management think the company share price is undervalued.
There could be more to come.

Quote for Memtech Q3 Report.

"Our touch screen panel operation will be our next focus as the market has expanded rapidly. To scale up the value chain, we target to commence the production of high end touch screen products: the capacitive touch screen panel, in mid 2011"

Memetech has invested substantially into Touch Screen manufacturing. It owns 100% of Teradisplay China and 11% of Galaxia Display Korea ( Formally Teradisplay Korea).

We shall expect positive contribution from Touch Screen manufacturing business in 2011.

Memtech was mentioned in the last week The Edge magazine article

"Strong Cash flows and limited Capital expenditure point to a Dividend bonanza"
It said: " Memtech International, a suppliers of component solutions for mobile phones, IT equipment and automobiles. CIMB sees Memtech's earnings recovery momentum gathering pace, with 2Q2010 earning up to 20% q-o-q and 3Q2010 up 150% q-o-q. Mid-2011, the company is expected to see contributions from manufacturing of touch-screen panels. Memtech is also benefiting from the growing popularity of Amazon's e-book reader, the Kindle. the company also has net cash per share of 5.4 US Cents, versus its share price of 15 cents.

It seems that there are very few Memtech shareholders in this forum ?