Memtech reported a 3% YoY increase in revenue to US$142.2m and a 26% core net profit to US$8.2m in FY15. Revenue was in line with our forecast of US$144.1m. Earnings outperformed, coming in 32% above our expected US$6.2m and 25% above the consensus estimate of US$6.5m; this was mainly due to a write back in the allowance of doubtful receivables that resulted in a 6.2% reduction of G&A.

We are encouraged by the 25% YoY growth of automotive segment revenue, as well as by the slower than forecasted 20% YoY decline in telecommunications sales. The overall gross profit margin remained stable at 17.5%. Pending an analyst briefing later, we put both our hold rating with our fair value estimate of S$0.72 under review.

Source: OCBC Research - 26 Feb 2016