Micro-Mechanics (Holdings)

[dreamybear]

Thanks ghchua for your replies.

I am trying to figure out how to ascertain whether a manufacturing type of company can grow its revenue/profit massively.

After the recent discussion, I am inclined to think that MM is more suited to a cyclical type of investment(following semiconductor industry's boom and bust) - buy at semiconductor's low cycle and sell when the industry is booming. Alternatively, buy at bust cycle and hold as it is a well-managed company with respectable dividends.

[¯|_(ツ)_/¯]

@db,
a) "manufacturing ... grow its revenue/profit massively."
I think other than TELSA, there won't be another one because manufacturing company are limited by their physical constraints (# of factories, floor space, # of production lines, etc).

A better place to look would be Fintech industry at this moment.

b) "MM is ... cyclical... boom and bust"
Yes. Similar to Property, Semiconductor is constantly subjected to the massive demand (which driving up the price) and then massive supply (which drive the price to rock bottom).  
Unfortunately, MM is serving customers right in the center of these boom and bust.  The question is actually how and what MM did (and doing) in order to survive in this market condition.

c) "buy low cycle and sell boom"
I had been a keen observer of MM bloggers (and valubuddies invested in MM).  This is actually the strategy that they wrote and also what they did.
Routinely, at different price point (78cts, $1.75, etc), different valuebuddies will gives a price estimation of MM.  When the target is met, these valuebuddies will update that they had sold (all or chunks) of MM.  
They always (always) mentioned that they would look forward to buy back at a lower price.
Did they buy back later at a lower price? and why couldn't they?

d) "hold... well-managed company with respectable dividend"
100% agree.
The main reason why valuebuddies who sold MM at their target price could not buy back cheaper, is because the price does not really drop.
In theory, MM price should drop since the target price is typically a stretch and it is not possible to hold above the target price.  The price must drop.
It didn't happen.
One of the reason why it didn't happen is because of the increasing dividend.  
I had observed that Singapore investors LOVE stocks with increasing dividend.  These few LOVE stocks are very resilient.

I guess, those valuebuddies who sold MM will have to make a decision sooner or later - to buy back at a higher price than their set target.







Gratitude.

[¯|_(ツ)_/¯]

So from my understanding, the competitive advantage is that, it's a small fish in a small pond. Hence, does not attract competition yet.

As increasingly smaller node size is required, increasingly lower tolerance (higher precision) parts are required.

Hence, as more and more semi customers use MM products to reach that low tolerance level, revenue grows; if revenue grows too big, it may start to attract competition? (at least based on financial theory)

Operating in China with a GP of 50%+ seems to be really interesting.
Granted, MM is a small fish and it's pond is really small. Almost all it's customers in the TAM already using MM products.

The facts that MM's dividend payout is 100%+ tells me that there are enough cash to return back to shareholders.  This is definitely a good news.

The only concerns is, they had reached their pinnacles.  Moving forward, what's their growth strategy?

For me, I always thought that MMUS should take over but it didn't.  A saving grace is, it had (finally) turn positive, and let's hope that it remains in the black (and not slipped into losses again).

Gratitude.

[¯|_(ツ)_/¯]

MM@322
Good morning, valuebuddies,
Wish everyone had a great National Day.

MM shareholders would be feeling very happy every National Day.
After National Day, we are looking forward to the annual report and looking forward to another record breaking dividend annoucement.


Regarding the questions on how to estimate the revenue of Micro Mechanics - well, the question is legi.

For the case of property development, we could easily track the number of unit sold in last Qtr and forecast the revenue.

For the case of Micro Mechanics, back in 2017, in his initiation paper, Head of Research, PaulChew@phillip.com.sg, mentioned that MMH revenue has a close correlation (+0.9 correlation coefficient) with semiconductor industry revenues.
(of course, Paul found another tracker in his later research paper).

Just sharing and see whether it could help fellow valuebuddies forecasting Micro Mechanics revenue for investment purposes.

https://drive.google.com/open?id=12cT4BO...ylhfcfPadq

Gratitude, especially to Donmihaihai for excellent write up on Micro Mechanics back in 2007.
(click to read Don's writeup on Micro Mechanics)

If you bother to click and read what Don says about MM, you'll realised something very strange:
For more than 15 years, MM had not changed.
For some, this would be bad news.
For some, this would be music to their ears.
What do you think? about a business that did not change much for more than 15 years?

[¯|_(ツ)_/¯]

MM@317
Back in 2017, in his initiation report, Paul Chew suggested to use Global Semicon industry sales to forecast MM's revenue.

However, in 7 Sep 2020, Paul reported that a better way to forecast MM's revenue would be using Taiwan packaging volumes.
https://internetfileserver.phillip.com.s...200907.pdf

This is not a surprise as we know that MM's tooling business primarily serving Semicon packaging customers and since MM's products are consumables which means that it's mandatory to change the tools after a specified number of cycles (usage), the correct way of mapping MM's revenue should be with the volumes instead of sales aka MM is kind of shielded from the notorious price fluctuation of semicon industry (but still subjected to the demand-supply cycle).


https://drive.google.com/open?id=1zFPSGE...fgNtXRZ6f8




Vested - major core.
And thanks to all valuebuddies who introduced Micro-Mechanics to me.

Gratitude.

[¯|_(ツ)_/¯]

MM@316
FY2021 result to be release next Saturday.

https://drive.google.com/open?id=1L275ky...1DQQ2_sP8K

Gratitude.

[¯|_(ツ)_/¯]

MM@326
FY2021 good result with 8 cents dividend (6+2 special)

While we waiting for Paul Chew (Philip securities), Eric Ong (Kim Eng), Clement Ho (UOB Kay Hian) and other financial bloggers to fill us in their view on FY2021 results and target price, let's take a gleams on MM's presentation released yesterday:


https://drive.google.com/open?id=1jb0KWt...Vkiu1mhI8U

The first things that caught my eyes is actually the word "Proprietary" consumable tools. For a second, I really thought there is some IP/Patent/Copyrights.  Then, I think and think and think, and concluded that it must be referring to something else. 

Now, the 2nd things that caught my eyes is the revenue driver.
If you look closer, there are actually 2 sets of revenue drivers.
Revenue for Front end tools (aka CMA) which is about 22% of MM's total revenue, depends on 

• Demand for WFE
  
• Advances in technology
  
• Customer penetration rate
  

Revenue for Back end tools (aka the normal Micro-Mechanics rubber tips) would depends on

• Chip production volumes
  
• number of installed die-attach/wirebonding machines
  
• Minaturisation of chip packages
  

So, Paul Chew was right in both case of his revenue forecast for MM. Excellent detective job!

The 3rd things that caught my attention is the TAM:
"Total addressable market for parts and tools used in critical chip-assembly and wafer-fabrication processes exceeds US$500 million"

With these 3 observations, I concluded that Micro-Mechanics or MM's investors are monitoring Valuebuddies discussions in vb.com closely.

Thank you for reading and Gratitude for answering our questions.

Gratitude.

[¯|_(ツ)_/¯]

MM@321
Sudhan@seedly reported on 30 Aug 2021:
Micro-Mechanics (SGX: 5DD) 
Latest Results: Revenue, Net Profit and Dividend Hit New Highs
https://blog.seedly.sg/micro-mechanics-s...-earnings/



https://drive.google.com/open?id=1diHndk...6fXFqgBjKE

Gratitude!


Waiting for more Analysts and bloggers to chip in too....

[¯|_(ツ)_/¯]

MMH@320
Today Royston@theSmartInvestor wrote about stocks paying high dividend.
One out of all these 5 stocks mentioned is owned by the writer.
No price in guessing which one. 

Read the article here:
https://thesmartinvestor.com.sg/these-st...-buy-today


https://drive.google.com/open?id=1tf5C8h...m1WFmmP4Fb

Gratitude.

[¯|_(ツ)_/¯]

MMH@323
This morning, Royston@TheSmartInvestor.com published a story:
This Singapore Dividend Stock Has Raised its Dividends Almost Seven Years in a Row: Is it a Buy?
(click to read)


https://drive.google.com/open?id=1ZWp0Gt...EraxQkAsNt

What do you think?

Gratitude.