I upped my stakes in Manufacturing Integration Technology on 4th July 2008

Rationale

I had just purchased more of Manufacturing Integration Technology (MITech) at 12 cents a piece. At 12 cents, this is my 2nd purchase of any net cash company trading near or below its cash balance per share. (My first is Armarda). MITech had almost NIL outstanding loans but SGD 27.3m cash & equivalents. Against last known common shares of 218.8m, its cash per share is about 12.48 cents. Hence I just got another company for free. Fortunately, its had a very strong balance sheet to ride through it without any debt to hold it down.

Prospects

SIAS research recently issued a sell call on 9th July after MITech issued a profit warning on 4th July. Against the gloomy outlook of semiconductor industry and manufacturing services in general in forseeable future, MITech will be in for a rough ride through the storm.

The two most hopeful segment for MITech is the recently acquired AMS Biomedical and Aerospace component manufacturing using the existing Shanghai precision engineering plant. As Singapore continue to push into Biomedical and related services, it is a reasonable expectation that MITech, via AMS Biomedical, can get a share of the expanding pie.

The Aerospace component manufacturing is still in the infancy. According to the latest Annual Report, management expect it to stablise in only after 2 years. Profit contribution could take longer. One positive aspect is by leveraging on existing Shanghai plant means that little capex is required.

Thus I would expect MITech to exhibit a turnaround in 3 to 5 years. Going in now might seems too early, but so long as the price is right, there's no way I can tell how the future will turn out.

Conclusion

If the share continue to trade below its cash per share, I'll be happy to buy more for free... if I had the cash :). Incidentally, the chairman is still buying, the latest annouced purchase was on 9th July 2008.