Micro-Mechanics performance falls below expectations: OCBC

Profit plunged more than 50% year on year and almost 40% quarter on quarter.

OCBC Investment Research said:

Micro-Mechanics (MMH) reported a lackluster set of 2QFY12 results. Although we had already factored in the tepid industry conditions and impact from the suspension of its Thailand operations in our assumptions, MMH’s performance still came in below our expectations.

Net profit dipped 58.5% YoY and 39.9% QoQ to S$0.7m on the back of a 23.6% YoY and 15.9% QoQ decline in revenue to S$8.7m. For 1HFY12, revenue of S$19.1m (-17.3%) formed 46.9% of our full-year forecast while net profit of S$2.0m (-47.5%) constituted 42.2% of our FY12 estimates.

Both MMH’s Semiconductor Tooling (SET) and Custom Machining & Assembly (CMA) segments fared badly, with YoY declines in sales and gross margins. The increase in operating expenses as a percentage of revenue also culminated in a 7.2 ppt YoY fall in its net margin to 8.6% for 2QFY12.

A cash dividend of 1 S cent was declared, in line with our expectations and payable on 23 Feb 2012.