Forbes Asia Best Under a Billion Company Micro-Mechanics (SGX: 5DD) Inks Record Revenue and Net Profit for FY2022

Micro-Mechanics (Holdings) Ltd (SGX: 5DD) is a Singapore-listed company that’s involved in the designing, manufacturing, and marketing of consumables and precision tools used in the semiconductor industry.

It was also part of the Forbes Asia Best Under A Billion list for 2022.

Yesterday, Micro-Mechanics released its earnings for its financial year ended 30 June 2022 (FY2022) where the company posted a second straight year of record revenue and net profit.

Right here, let’s look at 10 key points from Micro-Mechanics’ earnings release that investors should know about.

  1. Revenue for FY2022 increased by 11.8% year-on-year to a high of S$82.5 million due to stellar growth in the worldwide semiconductor industry. The company saw higher sales in its three largest markets of China, Malaysia and the USA.
  2. Gross profit margin for the year came in at 53.4%, down from 54.3% in FY2021 on the back of rising costs for materials, energy and manpower. Micro-Mechanics said that the inflationary pressures are expected to prevail in FY2023.
  3. Meanwhile, Micro-Mechanics’ FY2022 net profit rose 9.7% to a record of S$19.8 million, up from S$18.1 million a year back.
  4. The company’s earnings per share likewise grew 9.7% to 14.25 Singapore cents.
  5. Micro-Mechanics’ net profit margin for FY2022 was 24.0%, down slightly from 24.5% a year earlier.
  6. The company’s balance sheet remains rock-solid. As of 30 June 2022, it had S$20.4 million in cash and cash equivalents with zero bank loans.
  7. As for its return on equity (ROE), the metric grew to a healthy 34.0% for FY2022, up from 31.2% in FY2021 and 25.3% in FY2020. The continuously increasing ROE shows that the company’s management is doing a great job in using shareholders’ capital to grow its business.
  8. Operating cash flow for FY2022 fell slightly by 1.9% to S$25.2 million. With capital expenditure also decreasing for the year, free cash flow grew 7.4% to S$20.3 million. Free cash flow is money that Micro-Mechanics can use to reinvest into its own business, acquire other businesses, pay dividends to its shareholders, or buy back its own shares.
  9. Micro-Mechanics has proposed a final dividend of 6.0 Singapore cents per share and a special dividend of 2.0 cents per share, with the total dividend for FY2022 standing at 14 cents per share, the same as the previous year.
  10. The World Semiconductor Trade Statistics (WSTS) expects global semiconductors sales for 2022 to grow 16.3% to US$646 billion. For 2023, WSTS forecasts the market to grow a further 5.1% to US$680 billion. Micro-Mechanics should continue doing well over the long run as chips become increasingly relevant in nearly every aspect of our lives.

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Disclaimer: The information provided in this article is purely based on my opinions and is not intended to be personalised investment advice. The ideas discussed here are not recommendations to buy/sell any stock. The writer Sudhan P owns shares in Micro-Mechanics.

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