Founded in 1983, Micro-Mechanics (Holdings) Ltd (SGX: 5DD) is involved in the designing, manufacturing, and marketing of high precision parts and tools used in the semiconductor industry.
The company has five manufacturing facilities located in Singapore, Malaysia, China, the Philippines and the USA, and a sales office in Taiwan, serving customers around the world. With a diverse customer base, investors should take note of where Micro-Mechanics generates its revenue from. With such knowledge, when a country-specific issue crops up, investors can discern whether the issue will affect Micro-Mechanics’ business in the long-term, if at all.
Revenue breakdown by geography
Micro-Mechanics’ latest annual report has a useful chart on its revenue, broken down by geography:
Source: Micro-Mechanics (Holdings) Ltd FY2018 annual report
For the financial year ended 30 June 2018 (FY2018), the bulk of Micro-Mechanics’ revenue of S$65.1 million came from China. The country contributed to 27%, or S$18 million, of total revenue.
In its FY2018 annual report, Micro-Mechanics said that as China continues developing into a significant centre for worldwide chip manufacturing, the company remains focused on strengthening its operations in Suzhou (location of its manufacturing facility in China) to allow fast, effective and local support to customers.
The next largest market for Micro-Mechanics in FY2018 was the US. Sales from the country accounted for 19% of total revenue, or S$12.2 million. The US has overtaken Malaysia’s contribution of 18% to become the company’s second-largest market. In FY2017, Malaysia accounted for 21% of total revenue of S$57.2 million while the USA took up 16% of the pie.
Singapore accounted for 8% of Micro-Mechanics’ total revenue in FY2018. Together with the Philippines (10%) and Taiwan (7%), these six countries contributed to nearly 90% of the company’s business.
The Foolish takeaway
The bulk of Micro-Mechanics’ revenue comes from China and the US. The trade conflict between the two superpowers could affect the company’s supply chain. However, with a focus on the long-term, Micro-Mechanics should continue performing well.
Meanwhile, the Motley Fool Singapore analysts have identified a technology mega-trend we believe investors simply should NOT ignore. Tech revolutions of this magnitude usually come along just once or twice in a lifetime, and the companies at the forefront could make a fortune. Click here now for our comprehensive research report laying out the full story… AND one Asian stock we think is poised to win.
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. Motley Fool Singapore contributor Sudhan P owns shares in Micro-Mechanics.