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Memtech International - Ride the recovery

StockFanatic
Publish date: Wed, 29 Apr 2015, 09:31 AM
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Memtech appears set for multi-year earnings growth as the company successfully transitions towards serving automotive customers after the demise of the handset keypad industry. 3 year EPS CAGR of 31% driven by rising automotive sales (average 15% yoy sales growth) and margin expansion is a possibility.

We initiate coverage on Memtech, a component supplier with rubber and plastics expertise. Having survived the transition away from handset keypads, automotive products are the key earnings driver. At 10x CY16 P/E (19% discount to peers), our target price is S$0.22; initiate with an Add call. Key catalyst is positive quarterly earnings momentum. Key risks are order push back or loss of automotive customers.
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