Manufacturing Integration Technology turnaround story
From CIMB research summary,
Disclosure:I am vested, so view will be biased.
“MIT is a small-cap semicon turnaround story. Having returned to
profitability in 1H14, it is set to continue the recovery momentum in
FY15, thanks to new order wins. We also expect dividend payment to
resume in FY14.
MIT’s earnings recovery is being
driven by the resumption of orders
from customers. Applying its
historical average forward P/BV of
0.74x to 1H14 BVPS of S$0.13, we
estimate that its share price could
re-rate to S$0.096 in this recovery
cycle. The likely catalyst is new order
wins, especially in the solar field
which will help reduce its traditional
dependence on the semicon industry.
Back to the black
MIT turned in a loss of S$6.5m in
FY13 as its customers in the
semiconductor industry held back on
their capex. However, a recovery is in
place, with the company returning to
a profit of S$0.8m in 1HFY14, driven
by a return of demand from its
semiconductor customers. The
recovery momentum is expected to
continue in 2HFY14 given the new
order wins announced.
Orders are back
MIT also scored big at the recently
concluded Semi-con Taiwan 2014
Show where it launched its new
generation of vision inspection
equipment under its Smart Flex series.
An initial order for 11 new Smart Flex
machines was received. Together with
various other orders, the company
secured S$8.2m new orders, bringing
its order book to S$34.2m from
S$18m as at 21 Feb 2014. The
outstanding orders will be recognised
in 2H14. The recovery in demand
from its semicon customer is expected
to last into FY15. A possible bonus is
the successful completion of a
significant order for solar-related
equipment from an existing customer.
This could occur over the next 12
Expect a good FY14 and
MIT’s guiding principle is to pay
dividends only if the company is
profitable. In the last earnings
recovery cycle, MIT paid 0.25 Scts in
FY10 and FY11. Dividends were
skipped in FY12 (small profit) and
FY13 (loss making). We believe
shareholders will see at least 0.25 Scts
DPS as profits recover in FY14. If the
recovery is stronger, the company
may pay a special dividend. Assuming
a DPS range of 0.25 Scts to 0.50 Scts,
the prospective dividend yield range is
3.1% to 6.3%.
Insiders just bought some more shares.
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