Memtech posted weak 1Q16 results, below our expectations as well as consensus. Memtech's 1Q16 revenue of S$33.2m, 1.1% down YoY, made up 21.3% of our full-year forecast and 21.1% of consensus estimates. The increase in automotive sales was partially offset by a drop in telecommunication and consumer electronic sales.

We had previously forecasted a growth in consumer electronics sales for FY16 on the back of orders from new customers. PATMI fell sharply below our expectations, dropping 53% to S$0.6m. It made up only 7.0% of our full-year forecast and 6.3% of consensus estimates.

This is relative to 1Q15’s 14.9% contribution to FY15’s PATMI. We put our HOLD rating and fair value estimate of S$0.725 under review, pending more details at the analyst briefing later.

Source: OCBC Research - 29 Apr 2016