MICRO-MECHANICS (HOLDINGS) LTD.micromechanics.listedcompany.com/newsroom/20120130... · 1/30/2012 · Slower business conditions and continuing global uncertainties resulted in a

2Q12 Results Briefing30 January 2012

MICRO-MECHANICS(HOLDINGS) LTD.

BUSINESS HIGHLIGHTS Mr. Chris Borch, CEO

3

BUSINESS MODEL

Semiconductor Tooling

Custom Machining & AssemblyPrecision parts and assemblies for Tier-1 capital equipment manufacturers

Precision tools and consumable products used in the assembly and testing (A&T) of semiconductors

Large addressable market for tools in A&T space.Five factories in Asia.

Diversifies and adds market breadth to tooling business.Manufacturing facility in the USA.

4

SEMICONDUCTOR TOOLING

PRODUCTS

� Market-leading precision tools and parts used in die-attach, wire bonding and other semiconductor A&T processes.

� Consumable parts that need to be replaced regularly

Die-attach process and tools

WaferHolder

Pick-up Tip (Rubber, Plastic,

Metalic)

Needle Holderand Pepper Pot

Leadframe

Adhesive or Solder

Dispense Nozzle, Stamping Tool and Spanker

EjectorNeedle

Wedge Bond Ball

BondDie or Chip

Wire-Bond Clamps

EFO

Wire-bonding process and tools

Capillary and Wedge

5


COMPETITIVE POSITION

� Suppliers of precision tools include machine makers and small workshops with limited product range

� No known peers with similar level of proprietary technical know-how, product range & scale of operations

� We serve hundreds of customers in the chip A&T sector

CYCLE TIME – Around 8 daysCustomer Inquiry Customer Order Delivery

• Local sales & customer service

• Applications (solutions)

Tool Design

• 5 factories in Asia• Dedicated support• Automation

Manufacturing• After sales support• Quality-issue

resolution• Feedback loop

Service

Business Process

6


MARKET LANDSCAPE

� 80% of semiconductor A&T is carried out in Asia, where we have five factories

� Our share of the annual demand for precision tools used in the die-attach and wire-bond processes is around 20%*

� Annual demand for these tools is estimated at S$200 million� Demand for tools correlates with chip production volumes

Growing Installed Base of Die and Wire-bonding Machines*

025,00050,00075,000

100,000125,000150,000175,000200,000225,000

2011 2012 2013 2014 2015Die Bonder Gold Wire BonderCopper Wire Bonder Wedge Bonder

CAGR 8%

*Based on internal estimates

7


-10%

0%

10%

20%

30%

40%

50%

60%

70%

20.0

21.0

22.0

23.0

24.0

25.0

26.0

27.0

Jan-10

Mar-1

0

May-1

0

Jul-10

Sep-1

0

Nov-1

0

Jan-11

Mar-1

1

May-1

1

Jul-11

Sep-1

1

Nov-1

1

GLOBAL SEMICONDUCTOR INDUSTRY

� Supply disruptions due to floods in Thailand and economic challenges resulted in weaker chip sales performance in fourth quarter of 2011

Negative year-on-year growth in chip sales since July 2011

Global chip sales (US$ billion) Year-on-Year

Growth

Source: Semiconductor Industry Association (SIA)

298.3 302.3 310.2 328.1

31.8%

1.3% 2.6%5.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

2010 2011 2012 2013

Semiconductor sales forecast

Source: World Semiconductor Trade Statistics

� WSTS Autumn Forecast:- Semiconductor sales to grow

to US$302 billion in 2011, surpassing S$300 billion mark for the first time

- Expect steady and modest industry growth beyond 2011

Sales (US$ billion) Year-on-Year Growth

8


PRODUCT DEVELOPMENT

Miniaturization of devices requires the miniaturization of support tooling.� Towards 0.15mm outsidediameter and square rubber tip

PUSHING THE LIMITS OF SIZE

PERFECTING KEY PROCESSESProduct improvements through process innovations.Compression molding, Vacuum molding, Transfer molding.

The crucial element to ensure a high quality, reliable product that meets industrial needs

HAVING THE RIGHT MATERIAL

Product Development

Product Development

Process Development

Process Development AutomationAutomation

Growth DriversGrowth Drivers

Product Development

Process Development Automation

Growth Drivers

9

CMA BUSINESS

CYCLE TIME – Around 8 weeksPrint Manufacturing Delivery

• Technical support• Process development

& programming• Fixtures, tools &

prove-out

Print –> FAI

• 24/7 Automated manufacturing

• ‘Zero’ set-up

Manufacturing• After sales support• Quality-issue

resolution• Feedback loop

Delivery

Business Process

FAI

BUSINESS PROCESS AND CUSTOMERS

Customer IndustriesLaser

MedicalAerospace

Wafer fabricationOur top 10 customers’ annual

demand for machined components estimated at

>S$500M

10

CMA BUSINESS

COMPANY UPDATE

Increase value proposition


Automation(24/7)

Automation(24/7)

Technology transfer to

Asia


Asia

Growth Plans

Growth Plans


Automation(24/7)


Asia

Growth Plans

� Pilot line for automated, flexible manufacturing system (FMS) installed� Engineering tests are promising� Transition to production by 1Q13

Complex machined part under pilot-line testing

FINANCIAL REVIEWMr Chow Kam Wing, CFO

12

RESULTS AT A GLANCE

2Q12 2Q11 Variance from 2Q11

1H12 1H11 Variance from 1H11

REVENUE 8.7 11.4 (23.6%) 19.1 23.1 (17.3%)GROSS PROFIT 3.9 5.3 (26.9%) 8.6 11.0 (22.3%)GP MARGIN 44.4% 46.4% (2.0pp) 44.8% 47.6% (2.8pp)OPERATINGEXPENSES (net of other income)

2.9 3.0 (3.5%) 5.9 6.2 (5.3%)

NET PROFIT (after tax)

0.7 1.8 (58.5%) 2.0 3.8 (47.5%)

Profit and Loss (S$ million)

Interim DividendRecommending interim dividend of 1 cent per share (S$1.4 M in total)

13

Slower business conditions and continuing global uncertainties resulted in a revenue decline of S$2.1 million for semiconductor tooling business, and S$0.6 million for CMA business during 2Q12

GROUP REVENUE

9.5 11.7 9.3 11.7 10.4

9.7 9.09.8

11.48.7

9.2 5.4 10.111.1

9.87.0

11.811.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

FY2008 FY2009 FY2010 FY2011 FY2012

4Q3Q2Q1Q

(S$ mil)

38.233.1

41.0

-23.6%

45.3

FY: Financial year ending 30 June

19.1

14

8.2 7.7 9.6 8.8

6.4 8.09.5 7.4

3.98.0

9.05.8

9.28.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY2009 FY2010 FY2011 FY2012

4Q3Q2Q1Q

(S$ mil)

24.3

32.9

TOOLING BUSINESS

-22.0%

37.0


� Sales declined due mainly to slowdown in global chip manufacturing activity � Partly affected by suspension of operations in Thailand� Appreciation of SGD against the USD, Ringgit and Baht

16.2

15

3.41.6 2.0 1.6

2.6

1.82.0

1.3

1.6

2.12.1

1.2

2.6 2.2

0.01.02.03.04.05.06.07.08.09.0

10.0

FY2009 FY2010 FY2011 FY2012

4Q3Q2Q1Q

(S$ mil)8.8

8.1

CMA BUSINESS

-31.5%

8.3


� Reduced demand for capital equipment� Impact of USD depreciation against the SGD

2.9

16

REVENUE BY GEOGRAPHICAL MARKET

2Q12 2Q11 ChangeSingapore 0.5 0.5 0.1%Malaysia 2.0 2.4 (17.4%)Philippines 0.6 0.8 (17.0%)Thailand 0.3 0.9 (70.3%)China 1.7 1.8 (4.9%)USA 1.5 2.6 (43.3%)Europe 0.4 0.4 (5.5%)Japan 0.4 0.5 (24.0%)Taiwan 0.9 1.0 (1.6%)Rest of world 0.4 0.5 (20.6%)Total 8.7 11.4 (23.6%)

Singapore, 5%

Malaysia, 23%

Philippines, 8%

Thailand, 3%

China, 20%

USA, 17% Europe, 4%Japan, 4%

Taiwan, 11%

Rest of world, 5%

(S$ mil)

17

GROSS PROFIT MARGIN

� Gross profit declined by S$1.4 M to S$3.9 M in 2Q12� Capacity utilisation decreased to 46% compared to 54% in 2Q11� GP margin lower year-on-year due to selling price pressure, weaker

greenback, lower sales volume

50.9%44.0%

47.2% 48.0% 48.9% 46.4% 45.4% 42.7% 45.1% 44.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12


Target GPM : 50%

FY20

10 –

47.5

%

FY20

11 –

45.9

%

18FY: Financial year ending 30 June

GROSS PROFIT MARGIN

60.3% 58.8% 58.6% 59.3% 56.8% 54.3% 53.1% 50.1% 52.2% 52.5%

4.9%

-23.4%

3.7%8.6% 11.4% 8.0%

12.8% 12.6%4.8%

0.1%

-30.0%-20.0%-10.0%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12Semiconductor Tooling CMA

� Semiconductor tooling GPM remained above 50%� CMA GPM narrowed due to lower utilisation rate

19

OPERATING EXPENSES

OPERATING EXPENSES / SALES


29.5%34.1%

31.2%26.8% 26.1%

33.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

FY2008 FY2009 FY2010 FY2011 2Q11 2Q12

Target ratio : 20%

� Administrative, distribution and other operating expenses (inclusive of other income) decreased 3.5% y-o-y to S$2.9 M in 2Q12

� As a percentage of sales, operating expenses were higher in 2Q12 due to the drop in revenue

20

GROUP NET PROFIT

2.5 2.1 1.4 2.0 1.3

2.6

0.2 0.71.8

0.7

2.1

-1.4

1.3

1.6

1.7

-0.4

1.4

1.4

-4

-2

0

2

4

6

8

10

FY2008 FY2009 FY2010 FY2011 FY2012

4Q3Q2Q1Q

(S$ mil)

8.9

0.5

4.8

-58.5%1Q2Q

3Q4Q

6.8


� 1H12 net profit was S$2.0 million, down 47.5% from S$3.8 million in 1H11� Affected by weaker revenue and gross profit margin

2.0

21

BALANCE SHEET (31 DEC 11)

31 Dec 11 30 Sep 11CASH Operating cash flow

Cash and cash equivalents% of total assets

S$1.0 M (2Q12)S$6.0 M#

14.2%

S$2.5 M (1Q12)S$8.8 M18.9%

GEARING Total borrowings Nil NilTRADE RECEIVABLES

(Outstanding > 90days) / Total trade receivablesBad debt expense

0.1%Nil (2Q12)

0.8%Nil (1Q12)

INVENTORY Inventory / Sales Inventory write-off

5.8%*S$14k (2Q12)

5.5%*S$14k (1Q12)

EQUITY Shareholders’ equityNAV per share

S$36.6m26.31 cents

S$38.5m27.70 cents

* Annualised figures# Paid dividends of S$2.8 M with respect to FY2011 and invested around S$1 M in new production equipment during 2Q12.

OUTLOOKMr Chris Borch, CEO

23

IN CLOSING…

� Global economy remains fragile� Semiconductor industry expected to expand at modest pace in 2012

Operating Environment

Operating Environment

� Positioned to ride on industry strength and miniaturization trend� Rightsize our operations in Thailand, in line with expected decline in level

of customer activity there � 3Q (Jan-Mar) is a seasonally slower quarter; market conditions generally

improve in 4Q of the financial year



� Continued focus on improving operating fundamentals and cost structure� Investment in a fully-automated manufacturing underpins strategy for

building a compelling offering for customers and a strong competitive advantage

CMACMA

� Healthy cashflows from operations� No borrowingsFinancialFinancial

24

This presentation contains certain statements that are not statements of historical fact, i.e. forward-looking statements.Investors can identify some of these statements by forward-looking items such as ‘expect’, ‘believe’, ‘plan’, ‘intend’, ‘estimate’,‘anticipate’, ‘may’, ‘will’, ‘would’, and ‘could’ or similar words. However, you should note that these words are not the exclusivemeans of identifying forward-looking statements. These forward-looking statements are based on current expectations,projections and assumptions about future events. Although Micro-Mechanics (Holdings) Ltd. believes that these expectations,projections, and assumptions are reasonable, these forward-looking statements are subject to the risks (whether known orunknown), uncertainties and assumptions about Micro-Mechanics (Holdings) Ltd. and its business operations.

Some of the key factors that could cause such differences are, among others, the following:• changes in the political, social and economic conditions and regulatory environment in the jurisdictions where we conductbusiness or expect to conduct business;• the risk that we may be unable to realise our anticipated growth strategies and expected internal growth;• changes in and new developments in technologies and trends;• changes in currency exchange rates;• changes in customer preferences and needs;• changes in competitive conditions in the semiconductor industry and our ability to compete under these conditions;• changes in pricing for our products; and• changes in our future capital needs and the availability of financing and capital to fund these needs.

Given these risks, uncertainties and assumptions, the forward-looking events referred to in this presentation may not occur andactual results may differ materially from those expressly or impliedly anticipated in these forward-looking statements. Investorsare advised not to place undue reliance on these forward-looking statements.

Investors should assume that the information in this presentation is accurate only as of the date it is issued. Micro-Mechanics(Holdings) Ltd.’s business, financial conditions, results of operations and prospects may have changed since that day.Micro-Mechanics (Holdings) Ltd. has no obligation to update or revise any forward-looking statement, whether as a result ofnew information, future events or otherwise, except as required by law.

SAFE HARBOUR FOR FORWARD-LOOKING STATEMENTS

Micro-Mechanics31 Kaki Bukit PlaceEunos TechparkSingapore 416209www.micro-mechanics.com

Investor Relations ContactOctant ConsultingTel (65) 6296 [email protected] / [email protected]

MICRO-MECHANICS(HOLDINGS) LTD.

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MICRO-MECHANICS (HOLDINGS) LTD.micromechanics.listedcompany.com/newsroom/20120130... · 1/30/2012 · Slower business conditions and continuing global uncertainties resulted in a