SINGAPORE (Aug 3): Maybank KimEng likes Manufacturing Integration Tech (MIT) for issuing a positive guidance for 1H17 and is expecting the group to return to profitability on resumption in orders.
In a unrated report for retail investors, analyst Teh Kwong Yew says, “The turnaround is supported by the upturn in the global semiconductor industry and impending new handset launches, particularly Apple’s iPhone 8.”
MIT reported a net loss of $5.5 million following a downcycle in FY16 but the analyst anticipates the group’s 1H17 revenue to be near the $35.5 million achieved in FY16.
Sales momentum into 2H17 will be supported by MIT’s order book of $23 million, a significant jump from $12.7 million in June 2016. The jump in orders were led by the introduction of two new models of semiconductor equipment for vision inspection and die sorting to blue chip clients within the mobile communication and memory sectors.
This year also marks MIT’s silver jubilee, since its incorporation in 1992. Concurrently, the group has adopted a dividend payout of at least 25% of net profit.
Although the group’s historical dividend yield has ranged in between 1.8% to 6.3% when the company was profitable, the formal policy announcement would provide further assurance to investors, particularly with an earnings recovery underway.
The group also reports a healthy balance sheet with net cash of $14.1 million, representing 26% of market cap. This is expected to rise when the group turns profitable.
“While MIT is trading above its historical mean of 0.78x, it is worth noting that the valuation hit a high of 1.6x during its FY15 earnings upcycle, implying a possible price range of up to SGD0.32/share, based on FY16 book value,” says Teh.
Shares in MIT are trading flat at 25 cents as of 3.22pm.
