Memtech's 2Q16 revenue dropped 5.8% YoY to US$31.4m on the back of lower revenue from the Telecommunication and Industrial & Medical segment. 2Q16 revenue contributed 22.5% of our full-year forecast, while 1H16 revenue contributed 46.2%. Cost of sales increased 4.6% YoY on higher manufacturing cost from the outsourcing of some processes. This resulted in a 54.4% drop in gross profit to US$2.7m.

PATMI worsened from a profit of US$1.5m in 2Q15 to a loss of US$1.4m; this was below our expectations for a quarterly loss of ~US$0.1m. We put our HOLD rating and fair value of S$0.50 under review pending more details from the analyst briefing.  

Source: OCBC Research - 12 Aug 2016