Memtech announced yesterday after marketclose that it expects to report a net loss for 2Q16 mainly due to lower demand for the group’s telecommunication products and higher costs. The delay in the fulfillment of a major order at the customer’s request was also a contributing factor. We had previously projected a 2Q16 net profit of S$0.65m, which included an assumption of a 13% YoY drop in telecommunication revenue.

Our forecast for full-year net profit was at S$6.23m. Our forecasted FY16 distribution yield was 4.7% against yesterday’s closing price of S$0.64. We keep our HOLD rating intact and place our fair value of S$0.68 under review.

Source: OCBC Research - 28 Jul 2016