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Increasing Analyst Coverage on Micro-Mechanics - buying?
This week, there were 2 new detailed analysis of Micro Mechanics.
Note that Sudhan use printer and cartridge to illustrate Micro-Mechanics products are used as consumable parts and tools for Semi Conductor equipment.
Given more coverage, more valuebuddies should see the increasing investment merit of Micro-Mechanics as time go by.
For hardworking valuebuddies, read first hand directly from the source:
1. DBS -YONG Woon Bing "Spotlight on Semiconductor: Clear skies ahead"
(click for pdf) **Scroll to page 49 for MM**
2. Seedy-Sudhan "1 Hidden Gem Listed On The Singapore Stock Market"
(click to Seedy webpage)
As a spirit of learning, let me present a few facts and then raise a few questions to deep dive into Micro-Mechanics (moat).
By now, we should already know that lots of valuebuddies worked in the IT industry.
So, let me use a famous charts used in PMP:
![[Image: istock_8315206_coinsgraph1.jpg]](https://bridge360blog.files.wordpress.com/2013/12/istock_8315206_coinsgraph1.jpg)
This diagram shows the increasing costs required to fixed bugs discovered in different stages of project.
Back to Micro-Mechanics.
Tips 1: Micro-Mechanics products are consumable.
Consumable has a few characteristics.
a. It need to be changed regularly due to wear and tear.
b. It is cheap (relatively to the machine/equipment that it attached to)
c. It is part of OpEx aka not CapEx. When the machine is operating, consumable will be used.
d. When the economy crisis is looming aka factory expecting down-cycle, factory will stopped buying capital equipment. However, they will still continue to buy consumable despite expecting down-cycle. Granted, factory will buy smaller volume of consumable because of anticipated down-cycle, but importantly, so long as the production line is running, they will need to buy consumable. Contrast to capital equipment, the buying will actually stopped (until factory perceived that there is a up-cycle)
Tips 2: Micro-Mechanics products are used in the late or final stage of the wafer to chips manufacturing process.
Question:
1. Why? despite Micro-Mechanics management repeatedly mentioned that Micro-Mechanics is in a cyclical business, it's revenue and profits does not seems to be adversely affected by the semi conductor down-cycle (as compare to other SGX listed company operating in Semi Conductor industry)?
2. Why? despite Micro-Mechanics being a manufacturer of consumable parts and tools, it does not faced strong competition?
(Let me elaborate this question further. Being consumable, using common raw materials such as aluminum, steel and rubber, there are tons of small manufacturing companies which can produce the same/identical parts that Micro-Mechanics made. Questions is thus, why non of these small manufacturing companies can replace Micro-Mechanics clear leadership position in Semi Conductor industry?)
Cheer up:
=========== Signature ===========
感恩 Thank you
This week, there were 2 new detailed analysis of Micro Mechanics.
Note that Sudhan use printer and cartridge to illustrate Micro-Mechanics products are used as consumable parts and tools for Semi Conductor equipment.
Given more coverage, more valuebuddies should see the increasing investment merit of Micro-Mechanics as time go by.
For hardworking valuebuddies, read first hand directly from the source:
1. DBS -YONG Woon Bing "Spotlight on Semiconductor: Clear skies ahead"
(click for pdf) **Scroll to page 49 for MM**
2. Seedy-Sudhan "1 Hidden Gem Listed On The Singapore Stock Market"
(click to Seedy webpage)
As a spirit of learning, let me present a few facts and then raise a few questions to deep dive into Micro-Mechanics (moat).
By now, we should already know that lots of valuebuddies worked in the IT industry.
So, let me use a famous charts used in PMP:
This diagram shows the increasing costs required to fixed bugs discovered in different stages of project.
Back to Micro-Mechanics.
Tips 1: Micro-Mechanics products are consumable.
Consumable has a few characteristics.
a. It need to be changed regularly due to wear and tear.
b. It is cheap (relatively to the machine/equipment that it attached to)
c. It is part of OpEx aka not CapEx. When the machine is operating, consumable will be used.
d. When the economy crisis is looming aka factory expecting down-cycle, factory will stopped buying capital equipment. However, they will still continue to buy consumable despite expecting down-cycle. Granted, factory will buy smaller volume of consumable because of anticipated down-cycle, but importantly, so long as the production line is running, they will need to buy consumable. Contrast to capital equipment, the buying will actually stopped (until factory perceived that there is a up-cycle)
Tips 2: Micro-Mechanics products are used in the late or final stage of the wafer to chips manufacturing process.
Question:
1. Why? despite Micro-Mechanics management repeatedly mentioned that Micro-Mechanics is in a cyclical business, it's revenue and profits does not seems to be adversely affected by the semi conductor down-cycle (as compare to other SGX listed company operating in Semi Conductor industry)?
2. Why? despite Micro-Mechanics being a manufacturer of consumable parts and tools, it does not faced strong competition?
(Let me elaborate this question further. Being consumable, using common raw materials such as aluminum, steel and rubber, there are tons of small manufacturing companies which can produce the same/identical parts that Micro-Mechanics made. Questions is thus, why non of these small manufacturing companies can replace Micro-Mechanics clear leadership position in Semi Conductor industry?)
Cheer up:
=========== Signature ===========
感恩 Thank you