MEMTECH INTERNATIONAL - CHINA 3G AND AUTOMOBILE PLAY

HAVE YOU BOUGHT MEMTECH TO RIDE ON CHINA\'S NEW 3G MARKET . THE HANGSET SALES SURE TO BOOM IN 2010 ONWARDS . COMPANY LATEST 3Q RESULT .. SKY ROCKETED 91% TO A NET PROFIT OF $2.2 MILLION . CASH BALANCE OF US$36.8 MILLION NTA : 22c UNDERVALUED STOCK .

Good profit & good profit margin of about 13% in 06 and 07 and then a disastrous 08. :woohoo: Net profit (USD) 2008: 1,280 2007: 15,798 2006: 14,817 2005: 10,390 Earnings per share in 07 and 06 was 2.2 and 2.1 USD cents. If 2010 returns to that level after an unusually horrible 2009, the EPS of S$0.03 will mean PE of 3.7X (based on current stock price of 11 cents). It\'s not expensive at current level, but also not a screaming bargain, IMHO, for this small-cap company. I think the market has priced it quite fairly. btw, ZEN, where can I find reports linking the Memtech business to the 3G boom in China?

Our commitment to providing high quality and value-added services to our customers continued to bear fruit in 2008. We secured larger orders from Foxconn, one of our major customers, to supply mobile phone components mainly for its Nokia CDMA projects. We also obtained Sony Ericsson’s approval to directly engage it in the manufacture and supply of all ranges of mobile phone keypads. These orders of increasing scale and value from our MNC customers was a great shot in the arm for the Group’s long term prospects.

On the other hand, China’s mobile phone industry continues to offer vast growth opportunities for Memtech as we derive the bulk of our orders from our PRC customers. With the support of our domestic and MNC customers, we managed to maintain our profitability for the year. However, the onset of the global economic slowdown caused a significant decline in market demand in the second half of 2008, which further worsened beyond our expectations in the fourth quarter.

In spite of the lack of optimism globally, it is estimated that China’s mobile phone market will attain a 7.7% growth with handset shipments reaching 239.1 million units in 2009. Compared to the year before, marked improvements in China’s telecommunications services are expected to bolster the growth of the domestic mobile phone industry despite the weak consumer sentiment. This year, the three major telecommunications operators in China operating 3G licenses are also expected to invest an estimated RMB170 billion in network infrastructure construction, which will in turn boost the domestic market demand for new high-tech and high-speed 3G mobile phones and indirectly spur domestic mobile handset component suppliers to embark on related product development. To ensure that the Group stays abreast of market trends, we have commenced operations of manufacturing components for smart phones to cater to the 3G-specific requirements of domestic mobile phone manufacturers, in particular established customers such as Huawei and ZTE. In its bid to support consumption levels in the country, the Chinese government has leveraged on recent rural consumption trends to roll out subsidies for various household appliances targeted at farmers to increase their buying power. Mobile phones were recently included in the household appliance subsidy program due to its popularity with the rural markets. As a result, this project is expected to drive the growth of the low to mid-end mobile phone segment in China.

Memtech’s customers include major international mobile phone manufacturers including Motorola, Nokia, Sony Ericsson, Samsung, LG, Foxconn, Flextronics, TCL Alcatel and HTC, as well as reputable China brands such as Lenovo, Hwawei and ZTE.