Memtech

Memtech: (S$0.66) Transforming into a New Age component supplier​
- On a recent plant visit to China, Memtech appeared to be gearing to transform itself into a new age component manufacturer
- Recap: Relatively disappointing 1Q16 as net profit slumped 53% y/y due to a delay of its first project with Apple's Beats Electronics, which had to be renegotiated due to Apple's cost cutting measures.
- FY16 looks set to be a milestone year for Memtech to transition from a run-of-the-mill component manufacturer to a new age one with a client portfolio made up of brand names that encapsulate various pop culture themes.
- These include: Electric vehicles (Tesla), sharing economy (Roku), virtual reality (Parrot), audiophilia (Beats).
- Memtech is targeting FY16 net profit of US$8-9m (FY15: US$8.1m) and revenue of US$150m (FY15: US$142.2m).
- At current price, this would translate into a FY16 P/E of 7-7.7x relatively cheap compared to China-listed peers average of 33x. FY16 DPS expected to come in at ~SG2.5 cents translating into a yield of 3.8%.