Memtech beat our expectations on a solid set of results, with QoQ improvements in all four segments including the telcommunications unit which saw its revenue decline 31.6% YoY the last quarter.

Memtech's 3Q16 revenue increased 25.3% YoY to US$46.5m due to a jump in contributions from its Consumer Electronics segment. 3Q gross profit increased 43.9% to US$8.2m as margins increased from 15.4% to 17.7%, on the back of a higher utilisation rate and increase in sales revenue.

As a result, 3Q net profit increased 90.2% YoY to US$3.1m. 9M16 revenue came up to 80.9% of our full-year forecast while 9M16 net profit of US$2.3m far exceeded our FY16 forecast of US$1.2m.

We keep our Hold rating and fair value of S$0.48 under review pending more information from the analyst briefing.

Source: OCBC Research - 11 Nov 2016