Micro-Mechanics (Holdings)
MM
2Q21 result out on 29 Jan 2021 https://links.sgx.com/FileOpen/MMH-Date%...eID=645755 Sep 2020: Stay home and stay healthy, valuebuddies. 
26-01-2021, 08:49 AM
After the meteoric rise of MMH to $4 yesterday with the increase in volume. The question is still ride the momentum or time to take profit.
MM@$3.91
take profit bar. nothing wrong to book a profit. Stay home and stay safe, everyone.
26-01-2021, 02:05 PM
(26-01-2021, 08:49 AM)Rocinante2 Wrote: After the meteoric rise of MMH to $4 yesterday with the increase in volume. The question is still ride the momentum or time to take profit. Maybe can wait till 2Q21 results out if one is expecting the company to do well? Question then is where to park the money after taking profit since many stocks are now at very high levels?
27-01-2021, 08:27 AM
(26-01-2021, 02:05 PM)lester Wrote: Maybe can wait till 2Q21 results out if one is expecting the company to do well? Question then is where to park the money after taking profit since many stocks are now at very high levels? We can't demand the market to give us X returns. The market is structured for Y returns at each time and we have to decide whether we want to take it or not. The answer to your question is simple but not easy.
27-01-2021, 08:40 AM
(26-01-2021, 02:05 PM)lester Wrote:(26-01-2021, 08:49 AM)Rocinante2 Wrote: After the meteoric rise of MMH to $4 yesterday with the increase in volume. The question is still ride the momentum or time to take profit. High =/= expensive. Intrinsic value of a business has nothing to do with the price trajectory. If you value a business at $100, and it's priced at $20. Even after a 100% increase at $40, it's still cheap. In my opinion, Singapore market is pretty darn cheap if you know where to look (not the penny stocks please). Just off the back of my head, I could rattle off a list easily: Boustead, Tai Sin, SATS, Second Chance, Spindex, Amara, Bukit Sembawang, Nam Lee etc.
27-01-2021, 12:35 PM
(27-01-2021, 08:40 AM)Corgitator Wrote:(26-01-2021, 02:05 PM)lester Wrote:(26-01-2021, 08:49 AM)Rocinante2 Wrote: After the meteoric rise of MMH to $4 yesterday with the increase in volume. The question is still ride the momentum or time to take profit. Micro mechanics was trading at between 50m to 100m market cap for years. Considered as penny stocks no? Do agree that a big portion of SGX listed co are pretty cheap still. More so in so called penny stocks that many forgotten.
27-01-2021, 08:36 PM
(27-01-2021, 12:35 PM)donmihaihai Wrote:(27-01-2021, 08:40 AM)Corgitator Wrote:(26-01-2021, 02:05 PM)lester Wrote:(26-01-2021, 08:49 AM)Rocinante2 Wrote: After the meteoric rise of MMH to $4 yesterday with the increase in volume. The question is still ride the momentum or time to take profit. To me, low marcap means it's small-cap or micro-cap. Penny stocks refer to stocks that have a low trading price e.g. the ones at $0.001 or something, where majority of the trading is done by speculators/punters/gamblers, not investors. My experience is that most pennies (at least the ones in SG) have no fundamentals to speak off. Long story short, it's just a definition difference between market cap and trading price of stock.
27-01-2021, 10:35 PM
(27-01-2021, 08:36 PM)Corgitator Wrote:(27-01-2021, 12:35 PM)donmihaihai Wrote:(27-01-2021, 08:40 AM)Corgitator Wrote:(26-01-2021, 02:05 PM)lester Wrote:(26-01-2021, 08:49 AM)Rocinante2 Wrote: After the meteoric rise of MMH to $4 yesterday with the increase in volume. The question is still ride the momentum or time to take profit. It is a cyclical industry for MMH, there is a cycle. When cycle is down stock down, when cycle is up stock up. Agreed there is a long term value but in between, you can play the cycle to enhanced your return.
30-01-2021, 01:03 PM
MM 1HFY2020 Result
Rev $36m (vs 31m) GP $20m (vs 16m) NP $9m (vs 6m) Div 6cts (vs 5) https://links.sgx.com/FileOpen/MMH-SGXne...eID=646601 Impact of COVID-19 on the Group’s Factories One of our biggest concerns regarding COVID-19 is the possibility of a positive test by one or more of our people which might lead to the shutdown of a work area and/or the entire factory in order to undertake a full disinfection. Although we are working to mitigate this risk by following recommended safety protocols including masking, social distancing, cleaning, hand washing and eliminating all but essential employee or visitor traffic, the Group is highly wary of the possibility of a COVID-19 related quarantine or factory shutdown as we move forward. On 29 January 2020, we announced that our factory in Suzhou, China (“MMSU”), would be temporarily closed under a directive by the local government to help limit the spread of COVID-19 infections. After being closed for about three weeks, we gradually restored production and since the beginning of May 2020, MMSU has been running at normal operating and staffing levels. Strategic, Operating and Financial Review In spite of all of the challenges and concerns during this unprecedented period, the Group recorded a commendable performance in 2Q21. The Group’s quarterly revenue increased to a record level of S$18.7 million, up 15.2% from S$16.3 million in 2Q20. Our profit before tax rose 22.2% to S$5.7 million from S$4.7 million in the same period a year ago. After deducting taxes of S$1.2 million, Group profit after tax for 2Q21 increased 24.6% to S$4.5 million from S$3.6 million in 2Q20. On a half-yearly basis, Group revenue increased 16.7% to a record S$36.9 million while profit after tax rose 33.0% to a record S$9.1 million. Although dealing with the repercussions of a global pandemic is something new for the Group, we have always been mindful of the need to build an organization that is decentralized, flexible and resilient. Whether it is the adverse impact of a market downturn, introduction of disruptive technology, political unrest or a host of other unforeseen events, we need to have goals, structures and processes in place that make it easier for the Group to adjust to changes in circumstances and ensure business continuity. To this end, we intend to continue focusing on a handful of key initiatives which include: *Maintaining a Healthy Gross Profit Margin – Having a strong and unwavering focus on customers and the value we bring to their business is a key objective. This means working diligently to understand and meet the requirements of our customers by delivering Perfect Parts and Tools, On-Time, Every Time. As the semiconductor industry develops new equipment and processes for manufacturing chips with device geometries below 10 nano-meters, our customers will increasingly require parts and tools manufactured using improved materials and processes that eliminate defects and variability. In the future, we think there may only be a handful of suppliers capable of meeting these stringent requirements and our goal is to become a leading Next Generation Supplier. We believe that our strong customer focus, rigorous process for making investments and the great work by our people should enable the Group to maintain a healthy GP margin. Indeed, our GP margin in 2Q21 held steady at 53.9%, unchanged from 2Q20. For 1H21, our GP margin increased to 54.3% from 53.7% during 1H20. We plan to continue working to strengthen this key measure of our focus on the customer, competitive strength and the value our work creates. *Controlling Overhead Expenses – Maintaining a tight rein on expenses and developing improved processes in order to keep a lean overhead structure is of critical importance. During 2Q21 our total distribution, administrative and other expenses, including other income rose 6.2% to S$4.4 million from S$4.1 million in 2Q20. However, when measured as a percentage of sales, our overhead costs in 2Q21 declined to 23.6% from 25.3% in 2Q20. Indeed, for 1H21 our overhead costs as a percentage of sales declined to 22.8% from 25.0% during 1H20. At the end of 2Q21, the Group employed 523 great people, an increase of 2.8% from 509 people at the end of 2Q20. As the Group grows, we plan to continue working to improve efficiency, add personnel carefully and use technology to leverage the know-how and skills of our people. *Automating Our Operations – Because a single defect can cause disastrous consequences in the precision manufacturing process of semiconductors, our customers need the parts and tools used in critical processes to be flawless. To achieve this, our goal is to automate our operations around processes that are repeatable, scalable and cost-effective. This automation also extends to digitalizing our workflows for efficiency, mobility and the ability to work remotely for both personnel safety and work-life balance. Owing to a lack of business visibility caused by the COVID-19 pandemic, we adjusted the timing of some of our capital expenditure during the last nine months. After spending just S$1.0 million during 4Q20, we decided to accelerate our plans for several key investments. This resulted in total capital expenditure of S$5.3 million in 1H21 which includes a S$2.0 million investment for an initiative at MMUS to develop a new machining technology. We believe this technology will be essential for making the next-generation of parts for wafer-processing equipment that are designed to fabricate chips with geometries measuring well below 10 nano-meters. As a result of this investment and an increasingly positive outlook for the semiconductor industry, we have increased our capex budget for FY2021 to about S$7.0 million (our previously announced budget was S$4.0 million to S$5.0 million). *Growing Without Debt and Rewarding Our Shareholders - Building a great manufacturing business without debt helps to foster a culture of resourcefulness, discipline and careful decision making. In addition, we would like to attract shareholders who share our approach to long-term investing. Hence, one of the Group’s key goals is to continue growing without taking on debt while building a track record for consistently rewarding shareholders. During 1H21, we generated S$15.8 million in net cash from operating activities (S$8.0 million in 1H20). After net investing activities of S$5.2 million and a dividend payment of S$9.7 15 million, the Group ended the quarter in a strong financial position with S$21.1 million in cash (including S$0.2 million held as security deposits) and no bank borrowings. Since our listing we have also maintained a consistent practice of rewarding shareholders for their continuous support of Micro-Mechanics. During 2Q21, the Group distributed a final dividend of 5 cents and a special dividend of 2 cents per ordinary share in respect to FY2020. For FY2021, the Board has approved an interim dividend of 6 cents per ordinary share (5 cents for 1H20) payable to shareholders on 25 February 2021. In addition to reflecting our confidence in the Group’s long-term prospects, we hope our commitment to shareholder returns is especially helpful to our shareholders during this difficult and unprecedented period. Including the interim dividend for FY2021, we will have distributed total dividends of 91.9 cents per share since 2003. Based on dividends alone, this translates into a return of nearly 500% for shareholders who bought Micro-Mechanics shares at our Initial Public Offer. In many ways, it seems only like yesterday that we rang the gong at the Singapore Exchange to celebrate our Initial Public Offering (“IPO”) and start the trading of Micro-Mechanics shares. Based on our IPO price of S$0.23 a share and 107,488,712 fully-paid ordinary shares after our debut and the closing price of our shares on 28 January 2021, the market capitalization of the Group has increased about twenty times to roughly S$500 million from just over S$25 million in 2003. Following the Group’s IPO, our founder and Executive Director, Christopher Borch, together with his wife and four children, controlled 63.14% of Micro-Mechanics. Since that time, Mr. Borch has reduced his ownership of the Group to 49.978% mainly through gifts to various charitable organizations. During 2Q21, we announced a gift by Mr. Borch of 2,850,000 shares to The Borch Foundation, a 401c3 tax-exempt charitable corporation registered in the USA which was established by Mr. Borch and his wife in 2007. In the years ahead, the Borchs hope their philanthropic efforts will help to make a positive impact in areas of critical importance such as education, the environment and underserved communities. As of 31 December 2020, the Group had 139,031,881 fully-paid ordinary shares. Based on information available to the Group as of 3 September 2020, the percentage of shareholding held in the hands of the public was approximately 39.81%. The Group does not have any treasury shares. *Working to Ensure Leadership Continuity - The Board and our Executive Directors are also working to ensure leadership continuity. On 14 June 2019, we welcomed Kenny Kwan as Independent Director and Chairman of the Remuneration Committee. Mr. Kwan is currently a partner at Baker & McKenzie and qualified to practice law in Singapore, England and the USA (New York). We intend to continue working to refresh and strengthen our Board in accordance with regulatory guidelines and our own efforts to practice sound corporate governance. In August 2018, Mr. Borch’s oldest son, Kyle, joined the Group’s operation in the USA after completing a Bachelor of Science in Physics and a double Master of Science in Mechanical Engineering and Engineering Management. Kyle currently leads an eleven-person technical team responsible for tools, fixtures and other critical engineering support functions. A few years ago, we also began an engineering internship program and other initiatives at several of our plants. These efforts are designed to help develop the technical and leadership team the Group will need in the years ahead to ensure continuity. Although COVID-19 related travel restrictions hampered some of our plans during 1H21, this inability to travel has been a good reminder of the need for a strong and independent team of people. *Excelling in Transparency and Governance – Since going public in 2003, we have worked diligently to understand and put into practice the fundamentals of transparency and good corporate governance. Indeed, accurate, complete and timely information is the foundation for sound decision making – not just for investors – but for everyone at Micro-Mechanics from the board room to the shop floor. During 2Q21, The Edge, an independent investor publication, recognized Micro-Mechanics as The Most Profitable Company on the Singapore Exchange for companies with a market capitalization of less than S$1 billion in the industrial and services category. Indeed, since our listing in 2003, the Group has received recognition 31 times for our good corporate governance, transparency and investor relations. In addition, in the Singapore Governance and Transparency Index (SGTI) released on 4 August 2020, Micro-Mechanics improved its ranking to 13th out of 577 companies (17th out of 578 companies in 2019) listed on the Singapore Exchange. The top 20 companies in the SGTI are mainly large capitalisation companies. To affirm our commitment to transparency and good disclosure, our Board decided unanimously in February 2020 to continue with quarterly reporting of the Group’s financial results. Although it entails more work and is now an optional SGX requirement, we think quarterly reporting is the right decision especially after the fast-moving events that we witnessed during the last few quarters. We intend to continue working to build a strong corporate culture based on transparency, clear metrics of performance, stakeholder accountability and an unwavering commitment to good governance. *Seizing Opportunities for Long-term Success and Sustainability - While the demand for the high precision parts and tools that we supply to the semiconductor industry was robust in 1H21, there is plenty to worry about as we move into 3Q21. Rapidly changing markets, the shut-down of vast sections of the global economy caused by the COVID-19 pandemic, political and social turmoil in various parts of the world and the possibility that production at any of our plants may be suspended due to quarantine or other pandemic related restrictions, make it difficult to accurately predict business conditions in the short-term. However, against this challenging macroeconomic backdrop, the semiconductor industry has been remarkably resilient. Although the results for all of 2020 have not yet been published, WSTS expects the global chip industry to have grown 5.1% in 2020 to US$433 billion and to grow another 8.4% this year to US$469 billion. Indeed, we believe the semiconductor industry may be entering a Supercycle of multi-year growth powered by skyrocketing demand for computers and the need for enormous data centers to support remote work and learning, video streaming, online conferencing and a host of other internet-based platforms from social media to banking, health and even fitness. At the same time the demand for the chips that go into 5G phones and the cellular networks needed to support faster data-transfer, is also contributing to surging demand for semiconductors. Together with a proliferation of applications for chips in everything from today’s refrigerators and musical instruments to tomorrow’s driverless cars, many chip makers are currently swamped with orders. As a result, we foresee that the yearly growth rate of the semiconductor industry could possibly accelerate to double digits. This would translate into a massive industry of over US$1 trillion in annual chip sales in as little as seven years. Hence, the answer to the Group’s success lies in our continuing ability to manage through short-term difficulties and seize opportunities that come into view to make investments, design key initiatives and grow a team of great people that will help us to meet the evolving needs of our customers for Perfect Parts and Tools, On Time, Every Time based on scalable, repeatable and cost-effective processes. To this end, we plan to place an even greater emphasis on several of our existing operational methodologies which have proven to be hugely beneficial to the Group over the years. These include:
Stay home and stay healthy, valuebuddies.
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