Solid earnings, but portfolio slips as sentiment weakens

(Nov 20): This past week of the earnings season has brought positive news for some of the property and tech companies in our Singapore Market Portfolio. One of our holdings in the mining space continues to face headwinds, but is building new capabilities.

On the positive side, components manufacturer Memtech International saw a 26.5% y-o-y increase in earnings for 3QFY2017 ended Sept 30 to US$3.9 million ($5.3 million). Revenue dipped 0.5% to US$46.2 million as the telecommunications segment shrank 24.9%. However, this was offset by a 17.3% rise in revenue from the automotive segment and an 11.8% increase from the industrial and medical segment. Higher-margin products as well as greater operational efficiencies from automation boosted Memtech’s earnings margin. The stock was added to our portfolio on May 30 and has generated a 14% return so far.

UOB Kay Hian analyst Nicholas Leow expects Memtech to benefit from Tesla’s continued growth. Tesla is Memtech’s eighth-largest customer, according to Leow. The electric carmaker is planning to build a factory in China, which will be positive for Memtech. Leow has a “buy” call on Memtech, with a price target of $1.33.

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