1H 2016 Results BriefingSix months ended 31 Dec 2015
MICRO-MECHANICS (HOLDINGS) LTD.
FIRST HALFFY201629 January 2016
AGENDACorporate ReviewFinancial ReviewQ&A
3MICRO-MECHANICS (HOLDINGS) LTD.
CHRIS BORCH, CEOLOW MING WAH, COO
CORPORATEREVIEW
4MICRO-MECHANICS (HOLDINGS) LTD.
Global Monthly Chip Sales (US$ B)
Semiconductor Industry Landscape
-10%
-5%
0%
5%
10%
15%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0YOY Growth
Slowdown in demand conditions
• Global chip sales slowed from July 2015
• Cumulative sales for July to Nov 2015 were around 2% lower than the same period in 2014
Source: Semiconductor Industry Association
5MICRO-MECHANICS (HOLDINGS) LTD.
Semiconductor Industry Landscape
• WSTS expects the world semiconductor market to show flattish growth of 0.2% to $336 billion in 2015
• Growth in Asia-Pac to be offset by declines in Americas, Europe and Japan
• Expect moderate growth in 2016 and 2017
Source: WSTS
WSTS Semiconductor Market Forecast Autumn 2015 – World Semiconductor Market (US$ M)
335,843 336,392 341,011351,596
2014 2015F 2016F 2017F
0.2% 1.4% 3.1%
6MICRO-MECHANICS (HOLDINGS) LTD.
Group Strategy
Perfect Parts and Tools, On Time,
Every Time
Customer Value
Stakeholder Returns
Governance, Transparency
ORGANISATION GOALS
KEY OPERATING STRATEGIES
Research and DevelopmentProduct, Material and Process
Customer SupportFast, Effective and Local
24/7 MachiningRepeatable, Scalable, Cost-Effective
MMUniversityHuman Capital Development
• Established Applications and Process Engineering (“APE”) Centre in Singapore
• Established R&D Center for Materials and Fine-Machining in Singapore
• Developed 24/7 Machining and designated USA subsidiary as Corporate Center for Machining Excellence
• Implemented Enterprise Resource Planning
• Established MMUniversity
• Established Applications and Process Engineering (“APE”) Centre in Singapore
• Established R&D Center for Materials and Fine-Machining in Singapore
• Developed 24/7 Machining and designated USA subsidiary as Corporate Center for Machining Excellence
• Implemented Enterprise Resource Planning
• Established MMUniversity
‘MICRO” TOOLS FOR SEMICONDUCTORS | CUSTOM MACHINING & ASSEMBLY
7MICRO-MECHANICS (HOLDINGS) LTD.
Key Metrics – 1H16
SALES PRODUCTIVITY \ PROFITABILITYBALANCE
SHEETGOVERNANCE
Revenue was flat yoy amid weaker industry conditions
Gross profit margin up to 56.6% (1H15 : 53.8%)
Net profit up15.5%
Tight rein on operating expenses
Zeroborrowings
Healthy cash flows –S$16.6M cash balance
Ranked 18th out of 639 SGX-listed companies on the Governance Transparency Index (GTI) published on 18 Aug 2015
Group headcount: Net profit margin up to 24.5% (1H15 : 21.1%)
Tight control of trade receivables and inventory
Strong capital structure to support future growth
601
431
July 12
Dec 15
8MICRO-MECHANICS (HOLDINGS) LTD.
2.0
0.81.2
2.4
3.5
5.0 5.0
2.0
3.0 3.0 3.0 3.0 3.0
5.0
Special dividend
Final dividend
Interim dividend
Dividend per share (cents)
TOTAL DIVIDENDS OF 41.9 CENTS PER SHARE SINCE LISTING
Interim Dividend for 1H16
DIVIDEND POLICY TO PAY NOT LESS THAN 40% OF CONSOLIDATED NET PROFIT
9MICRO-MECHANICS (HOLDINGS) LTD.
CHOW KAM WING, CFOFINANCIAL REVIEW
10MICRO-MECHANICS (HOLDINGS) LTD.
1H16 in Review
25.8
14.6
0
8.16.3
11.2
0.5
7.0
1.8
1H16 P&L Overview (S$ million) KEY RATIOS & STATISTICS
REVENUE GROWTH (0.5%)
GROSS PROFIT GROWTH 4.7%
NET PROFIT GROWTH 15.5%
GROSS PROFIT MARGIN 56.6%
NET PROFIT MARGIN 24.5%
EARNINGS PER SHARE 4.54 cents
RETURN ON EQUITY (annualised) 26.3%
CASH S$16.6M
DEBT Zero
11MICRO-MECHANICS (HOLDINGS) LTD.
11.7 10.4 9.9 11.1 13.0 13.6
11.48.7 9.3
10.512.9 12.2
11.1
9.4 9.210.6
13.4
11.1
10.3 10.811.7
12.9
80
130
180
230
280
330
0
10
20
30
40
50
60
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
4Q
3Q
2Q
1Q
45.3
38.8 39.2
Group Revenue (S$ mil)
Global Chip Sales Trend (US$B)
1Q16 : +4.3% | 2Q16 : -5.5% | 1H16 : -0.5%
37.032.5 33.8 36.7
44.7
22.5 22.8
8.3
6.3 5.47.2
7.5
3.4 3.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
FY2011 FY2012 FY2013 FY2014 FY2015 1H15 1H16
CMA
SemiconductorTooling
Revenue Drivers
Global Chip Sales Trend according to FY. Data from Semiconductor Industry Association (SIA)
43.9
Group Revenue
52.2
FY: Financial year ending 30 June
25.8
12MICRO-MECHANICS (HOLDINGS) LTD.
9.6 8.8 8.6 9.4 11.3 12.0
9.5 7.4 8.1 8.711.2 10.8
9.07.7 7.8 8.7
11.38.9
8.6 9.39.9
10.9
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
4Q
3Q
2Q
1Q
37.032.5 33.8
(S$ mil)
2.0 1.6 1.3 1.7 1.7 1.6
2.01.4 1.2
1.8 1.7 1.4
2.11.6 1.5
2.0 2.1
2.2
1.71.4
1.7 2.0
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
8.3
6.35.4
Semiconductor Tooling CMA(S$ mil)
0% 20% 40% 60% 80% 100%
FY2011FY2012FY2013FY2014FY2015
1H16
Semiconductor Tooling CMA
Percentage of Revenue
36.7
7.2
Quarterly Revenue By Business Segments
44.7
3.0
22.87.5
13MICRO-MECHANICS (HOLDINGS) LTD.
DIVERSIFIED REVENUE STREAMS
Revenue by Geographical Market
Singapore, 5%
Malaysia, 20%
China, 30%
Thailand, 2%
Philippines, 9%
USA, 14%
Europe, 5% Japan, 2% Taiwan, 10%
Rest of world, 3%
Sales Breakdown for 1H16
MAJOR MARKETS FOR SEMICONDUCTOR
TOOLING
KEY MARKET FOR CMA
Country1H16 1H15
% changeS$ mil S$ mil
Singapore 1.4 1.7 (15.5%)Malaysia 5.2 5.7 (9.3%)Philippines 2.4 2.2 7.5%Thailand 0.5 0.8 (39.0%)China 7.7 6.7 14.2%USA 3.5 3.7 (2.5%)Europe 1.3 1.1 13.8%Japan 0.5 0.5 (10.7%)Taiwan 2.6 2.6 2.0%
Rest of world
0.7 0.9 (23.4%)
Total 25.8 25.9 (0.5%)
Sales in China grew despite slowdown in semiconductor industry
Higher sales volume in Malaysia offset by depreciation of the Ringgit
14MICRO-MECHANICS (HOLDINGS) LTD.
46.3%
49.1%
50.7%
55.0%
52.9%
54.7%
57.3%
56.6%
0% 20% 40% 60% 80%
FY2012
FY2013
FY2014
FY2015
1Q15
2Q15
1Q16
2Q16
Group GPM
53.4%
55.8%
56.0%
62.6%
59.8%
61.8%
63.8%
62.1%
9.7%
6.3%
23.2%
14.2%
6.3%
9.6%
10.7%
6.7%
0% 20% 40% 60% 80%
FY2012
FY2013
FY2014
FY2015
1Q15
2Q15
1Q16
2Q16
CMA
Semiconductortooling
GPM by Business Segments
Expansion of GP margin in 1H16 attributed to implementation of 24/7 Machining and other strategies that have raised productivity, improved operating efficiency and reduced production costs
STEADY MARGIN EXPANSION YOYGross Profit Margin
15MICRO-MECHANICS (HOLDINGS) LTD.
1Q16 : +28.4% | 2Q16 : +1.9% | 1H16 : +15.5%
2.0 1.2 1.2 2.1 2.8 3.61.8
0.7 1.01.4
2.72.71.6
0.91.4
1.8
3.7
1.4
1.41.5
2.4
2.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
4Q
3Q
2Q
1Q
6.8
4.25.1
(S$ mil) Net Profit After Tax
26.8%
31.4%
31.4%
28.5%
25.5%
25.0%
0% 10% 20% 30% 40%
FY2011
FY2012
FY2013
FY2014
FY2015
1H16
Operating Expenses - Administrative, distribution and other operating expenses (inclusive of other income)
Operating Expenses / Revenue
Admin, Distribution and Other Operating expenses (net of other income) held steady at S$6.5M in 1H16, compared to S$6.6M in 1H15
Although revenue was flat, net profit was higher in 1H16 – attributed mainly to increased GPM and tight control of expenses.
7.7
Group Net Profit
12.0
6.3
16MICRO-MECHANICS (HOLDINGS) LTD.
8.7 8.9 8.8
10.8
14.1
7.7
0
2
4
6
8
10
12
14
16
FY2011 FY2012 FY2013 FY2014 FY2015 1H16
(S$ mil)
6.7 6.5
2.6
6.64.9
1.1
5.5
0
2
4
6
8
10
12
14
16
FY2011 FY2012 FY2013 FY2014 FY2015 1H16
(S$ mil)Track record of healthy net cash
from operating activities CAPEX
Net Cash from Operating Activities and CAPEX
Planned Capex for FY2016 S$6.6M
17MICRO-MECHANICS (HOLDINGS) LTD.
31 December 2015 30 June 2015
Cash Cash and cash equivalents S$16.6# S$15.2
Gearing Total borrowings Nil Nil
Trade Receivables
Trade Receivables(Outstanding > 90days) / (Total trade receivables)Bad debt expense
S$9.0M0.8%
S$11.5k (1H16)
S$9.2M0.3%
S$1.2k (FY15)
Inventory InventoryInventory / Sales Inventory write-off
S$3.2M6.3%
S$38k (1H16)
S$3.5M6.7%
S$104k (FY15)
Equity Shareholders’ equityNAV per share
S$48.0M#
34.52 centsS$46.9M
33.72 cents
# Paid dividends of S$4.2M (Final and special dividends for FY2015)
Balance Sheet
18MICRO-MECHANICS (HOLDINGS) LTD.
CHRIS BORCH, CEOLOW MING WAH, COO
KEY TAKEAWAYS
19MICRO-MECHANICS (HOLDINGS) LTD.
• Delivered profit growth despite weaker market conditions
• Expansion of GP margin, the result of improved operational efficiency and productivity gains
• Maintain interim dividend of 2.0 cents per share for 1H16
• Markets remain unpredictable and cost-competitive Global chip sales for 2015 expected to be flat with modest growth expected for 2016
• Continue to focus on enhancing our value for customers to grow our top line & sustain growth over long-term
• Aim to deliver consistent returns to our shareholders
Key Takeaways
20MICRO-MECHANICS (HOLDINGS) LTD.
This presentation contains certain statements that are not statements of historical fact, i.e. forward-lookingstatements. Investors can identify some of these statements by forward-looking items such as ‘expect’, ‘believe’,‘plan’, ‘intend’, ‘estimate’, ‘anticipate’, ‘may’, ‘will’, ‘would’, and ‘could’ or similar words. However, you should note thatthese words are not the exclusive means of identifying forward-looking statements. These forward-looking statementsare based on current expectations, projections and assumptions about future events. Although Micro-Mechanics(Holdings) Ltd. believes that these expectations, projections, and assumptions are reasonable, these forward-lookingstatements are subject to the risks (whether known or unknown), uncertainties and assumptions about Micro-Mechanics (Holdings) Ltd. and its business operations.
Some of the key factors that could cause such differences are, among others, the following:• changes in the political, social and economic conditions and regulatory environment in the jurisdictions where weconduct business or expect to conduct business;• the risk that we may be unable to realise our anticipated growth strategies and expected internal growth;• changes in and new developments in technologies and trends;• changes in currency exchange rates;• changes in customer preferences and needs;• changes in competitive conditions in the semiconductor industry and our ability to compete under these conditions;• changes in pricing for our products; and• changes in our future capital needs and the availability of financing and capital to fund these needs.
Given these risks, uncertainties and assumptions, the forward-looking events referred to in this presentation may notoccur and actual results may differ materially from those expressly or impliedly anticipated in these forward-lookingstatements. Investors are advised not to place undue reliance on these forward-looking statements.
Investors should assume that the information in this presentation is accurate only as of the date it is issued. Micro-Mechanics (Holdings) Ltd.’s business, financial conditions, results of operations and prospects may have changedsince that day. Micro-Mechanics (Holdings) Ltd. has no obligation to update or revise any forward-looking statement,whether as a result of new information, future events or otherwise, except as required by law.
Safe Harbour for Forward-Looking Statements
31 Kaki Bukit PlaceEunos Techpark
Singapore 416209www.micro-mechanics.com
Octant ConsultingTel (65) 6296 3583
[email protected] [email protected]
MICRO-MECHANICS (HOLDINGS) LTD.
Investor Relations Contact
Micro-Mechanics (Holdings) Ltd.