Industry headwinds to batter Memtech International’s profits in 2016: analysts

For starters, consumer electronics growth is moderating.

Analysts are paring down earnings expectations for Memtech International in 2016, as a handful of industry headwinds are expected to batter the company’s finances.

According to OCBC, forecasts for worldwide device shipments in 2016 have dropped. While Memtech also supplies parts outside of this category (such as wearables), the growth of components like keyboards, router shells, and Kindle light is expected to be roughly in line with that of the device shipments market.

In addition, despite growth drivers in the automotive sector remaining intact, expectations are set for more muted US growth after a record year as the market enters its 7th year of expansion. Meanwhile, China’s 9.3% YoY pick-up in new car sales last month does little to ease concerns about the sustained macroeconomic uncertainties in the country.

OCBC notes, though, that while these industry headwinds will likely curb Memtech’s earnings for FY15 and FY16, the company’s position as a competitive neophyte in industries undergoing still makes the company an attractive investment. OCBC further asserts that Memtech has been shelling out dividends consistently since listing, even when it sank into the red in 2012 and 2013.