Micro-Mechanics (Holdings) Ltd Delivers Strong 1HFY2026 Results – Signals Sustained Momentum and Strategic Expansion

Key Highlights

• Group revenue up 8.7% year-on-year to S\$35.4 million for 1HFY2026, driven by robust demand for consumable tools.
• Gross profit margin expanded to 51.3% in 1HFY2026 (from 49.1% in 1HFY2025), reflecting improved operational efficiencies and product mix.
• EBITDA up 12.5% year-on-year to S\$12.6 million, with EBITDA margin rising to 35.6%.
• Net cash position of S\$27.2 million with zero borrowings, underpinning a strong balance sheet.
• Interim dividend of 3.0 cents per share declared, with a payout ratio of 60.8%.
• Continued capital investment – S\$2.3 million expected in 2HFY2026, focused on advanced packaging and WFE (Wafer Fab Equipment) manufacturing capabilities.
• Industry outlook revised upwards – global semiconductor revenue forecast to reach US\$975 billion in 2026, supported by AI and datacentre demand.
• Strategic initiatives underway: Decentralised customer support, Five-Star Factory initiative, new R&D breakthroughs, and enhanced talent retention.

Financial Performance – Sustained Growth and Strong Margins

Micro-Mechanics reported a notable revenue increase of 8.7% year-on-year for the first half of FY2026, reaching S\$35.4 million. This growth was primarily led by the consumable tools segment, which hit a 14-quarter high. The WFE segment also saw a recovery in the second quarter due to improved supply chain conditions, though it was slightly down year-on-year due to material delays in 1QFY2026.

Gross profit margin rose to 51.3%, benefiting from a favourable sales mix and enhanced operational efficiencies. EBITDA climbed to S\$12.6 million (up 12.5% yoy), with the margin up by 1.2 percentage points to 35.6%. The company’s return on equity remains robust at 25.1%. Operating cash flow generation remains strong, reflecting healthy working capital management.

Balance Sheet Strength and Capital Management

The company maintains a net cash position of S\$27.2 million as of 31 December 2025, with no borrowings. Inventory levels remain tightly managed, representing 5.3% of sales, and trade receivables are well-controlled, with minimal bad debts reported. Net asset value per share increased to 37.82 cents, and shareholders’ equity rose to S\$52.6 million.

Shareholder Returns – Consistent Dividends and TSR

Micro-Mechanics remains committed to delivering strong shareholder returns, declaring an interim dividend of 3.0 cents per share for 1HFY2026 with a high payout ratio of 60.8%. Since listing, the company has distributed cumulative dividends of 137.9 cents per share – representing over 700% shareholder returns and a total shareholder return (TSR) of more than 3,000%.

Operational & Strategic Developments

• Five-Star Factory Initiative: The Group continues to strengthen its operational foundation through its Five-Star Factory initiative, focusing on innovation, high-performance teams, workplace efficiency and safety, customer engagement, and operational excellence.
• Decentralised Customer Engagement: Micro-Mechanics is decentralising its structure to respond more effectively to customer needs, particularly in Taiwan and Arizona, both of which are experiencing significant semiconductor investments.
• Talent and Culture: In October 2025, shareholders approved a new Performance Share Plan (PSP 2025) to incentivise and retain high-performing employees, aligning rewards with company performance.
• Lean Manufacturing and Inventory Management: Continued focus on streamlining processes, minimising waste, and keeping inventory lean to support faster lead times and lower costs.
• R&D Breakthroughs: The Group’s R&D team is developing new elastomers for advanced packaging applications and implementing new physics-based programming techniques to boost machining efficiency by 10-30%. A new machine for WFE parts will be installed in the US plant in 1QFY2027, expected to further improve quality and throughput.
• Geographical Diversification: Revenue is well-diversified, with China (36.35%), USA (20.16%), Malaysia (17.64%), and Singapore (8.03%) as the top contributors. The Group’s decentralised presence helps mitigate geopolitical and trade risks.

Industry Outlook – Semiconductor Market Set for Robust Growth

The global semiconductor industry is projected to rebound strongly, with worldwide revenue forecasted to reach US\$772 billion by end-2025 and US\$975 billion by end-2026. This uptick is fueled by heightened demand in logic and memory semiconductors, propelled by AI-related applications and data centre expansion. Micro-Mechanics, with its specialised focus on process-critical parts for both wafer-fab and back-end assembly, is well-positioned to benefit from this sector momentum.

Strategic Priorities and Capital Expenditure

Looking ahead, the Board has approved a higher capital expenditure of S\$2.3 million for 2HFY2026, targeting advanced packaging product development and new equipment for wafer-fab manufacturing. These investments are expected to enhance both capability and capacity, supporting the Group’s ambition to be a leading next-generation supplier to the semiconductor industry.

The company will continue to prioritise disciplined capital management, operational excellence, and customer-centric innovation, while progressing towards achieving a “Five-Star 8S” rating across all five global plants.

Potential Price-Sensitive Information

• Upward revision in industry outlook with global semiconductor sales expected to surge by over 26% in 2025 and a further jump in 2026.
• Significant capital expenditure plans for 2HFY2026, with targeted investments in high-growth areas like advanced packaging and WFE, could drive future revenue and profitability.
• Operational excellence and innovation milestones, such as the deployment of new machines and process technologies, may improve margins and competitive positioning.
• Consistent high dividend payout and robust cash position reinforce the company’s commitment to shareholder returns, likely supporting share price stability and investor confidence.
• Strategic decentralisation and focus on key markets (e.g., Taiwan, Arizona) could open new revenue streams and mitigate geopolitical risks.

Conclusion

Micro-Mechanics (Holdings) Ltd has demonstrated resilient growth, operational discipline, and a forward-looking strategy in the face of industry cyclicality. With a robust balance sheet, sustained cash flows, industry-leading margins, and a clear roadmap for innovation and expansion, the Group is well-positioned to capture opportunities arising from the global semiconductor upcycle. Shareholders and investors should closely monitor upcoming capital investments, R&D initiatives, and industry developments, as these could have a material impact on future performance and share valuation.

Disclaimer: This article is for informational purposes only. It does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making investment decisions. All forward-looking statements are subject to risks and uncertainties which may cause actual results to differ materially.

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