Micro-Mechanics AGM and 1Q 2026: Flat Quarter Masks Resilient Turnaround and Future Growth

This was the third year in a row that I attended Micro-Mechanics Holdings (SGX:5DD), or MMH, AGM at Capitol Tower on 30 October.

Like in previous years, it was a small gathering with probably just around a hundred attendees. The first quarter results were also released before the meeting, allowing them to be discussed.

I’ve no new intel to add to my earlier sharing of the company’s FY2025 performance.

In essence, FY 2025 marked the reversal of MMH’s declining sales with a 12.6% a year-on-year (YOY) growth to S$65.2 million, and its successful turnaround of MMUS recent years’ losses to an operating profit of S$1.2 million.

Now, let’s take a look at the 1Q 2026 results to see if MMH sustained last year’s momentum.

Flat Headline Numbers Don’t Reflect the Full Story

I was expecting to see another double-digit growth but unfortunately it did not manifest in this quarter.

Revenue and net profit for the quarter are up less than 3% YOY to S$16.7 million and S$3.2 million respectively.

As the chart shows, the strength comes from the consumable tools segment, where sales are up by a credible 7.9% YOY (a 13-quarter high). But a 15.3% YOY drop in the Wafer Fabrication Equipment (WFE) segment sales dampened the overall growth.

The good news though is this WFE decline is likely to be temporary.

For the quarter, orders for WFE segment increased to S$4.0 million but delays and shortages in material resulted in reduced fulfilment of the orders.

Therefore, the reduced growth is simply a timing issue.

Resilient Operating Cash Flow to Pave Future Growth

Operating cash flow (ocf) remains strong, leading to a net increase in cash and equivalents by about S$3.8 million to more than S$27 million.

If MMH can sustain similar or higher ocf for the remaining three quarters, annual ocf will range from S$18 million to S$20 million.

That not only will allow MMH to fund the anticipated S$4 million capital expenditure (capex) for the year, but also allow it to at least maintain the current dividend of S$0.06 per share (~S$8.4 million in total).

The capex, which is significantly higher than previous two years (FY 2025: ~S$1.5 million, FY 2024: ~S$2.5 million), will be used to enhance production capacity and capabilities across all five factories.

While it wasn’t discussed, it’s my opinion that MMH could eventually explore bringing its WFE capability from MMUS to its factories in Asia.

There’s no reason not to do that over the longer term, especially when management sees that WFE potential market is much larger than the tools market.

That said, CEO Kyle Borch reiterated that MMH will continue to focus on critical parts and tools, which require ultra precision and cleanliness. This already presents a sizeable market for the company and one that is less competitive.

With a market cap less that S$250 million, Micro-Mechanics is a very small player in the semiconductor industry.

However, being able to stay in the field and grow its market cap by ten fold since its listing in 2003, shows the tenacity of the company and the strong relationship it built with its customers.

If MMH, under the new CEO, can continue to stay resilient and adaptive, it has the potential to become a much larger company a decade later.

I’ll continue to hold on to my current stake and monitor its progress.

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