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Micro-Mechanics (Holdings) Ltd’s FY2017 Annual Report: 22 Numbers to Understand More About the Business

Founded in 1983, Micro-Mechanics (Holdings) Ltd (SGX: 5DD) manufactures high precision tools and parts used in the semiconductor industry.

Last week, the firm released its annual report for the full year ended 30 June 2017 (FY2017). Here are some statistics that investors might want to know about from the report.

How much did the business bring in?

Revenue for FY2017 was up 11.7% year-on-year to S$57.2 million. Meanwhile, its net profit surged 24.2% to S$14.8 million. This translated to a net profit margin of 25.8%, up from 23.2% in FY2016. Earnings per share was 10.6 Singapore cents, an increase from 8.6 cents seen a year ago.

Return on equity came in at 27%, an improvement from 23.7% in the previous year.

The firm generated a cash flow from operations of S$18.1 million. With capital expenditure coming in at S$5.1 million, free cash flow of S$13 million was brought in.

Revenue for the year improved mainly due to higher sales achieved in all its geographical markets, except Europe.

China accounted for 26% of the total revenue to remain as the firm’s largest market. Sales from its second largest market, Malaysia, accounted for 21% of total revenue. The third largest market for FY2017 was the United States.

How much would shareholders get? 

For FY2017, shareholders would receive a total dividend of 8.0 Singapore cents per share, an improvement from 6.0 cents declared a year ago.

Micro-Mechanics would have paid out 75.3% of its earnings as dividend for the year. The dividend cover would be 1.3 times.

Its dividend has admirably grown from 0.8 cents in FY2003 to 8.0 cents in FY2017, as seen below:

Source: Micro-Mechanics (Holdings) Ltd Annual Report 2017

What’s the outlook for the firm?

The World Semiconductor Trade Statistics raised its 2017 sales growth forecast for a second time to 11.5% from 6.5% previously.

Even though this is a welcome change from the sluggish conditions seen in 2016, the semiconductor industry is being increasingly driven by price-sensitive consumer applications. Therefore, Micro-Mechanics expects continued price and cycle-time pressures from its customers.

With rising costs and a shortage of skilled workers, the operating environment for the firm is expected to remain challenging but it understands what is required to sustain its growth over the long-term.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Micro-Mechanics (Holdings) Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Micro-Mechanics (Holdings) Ltd.