SINGAPORE (Nov 25): OCBC has started coverage on precision engineering firm Memtech International with a “buy” call and target price of 15.8 cents, on optimism that the company’s expansion beyond the mobile phone industry into automotive and consumer electronics sectors will be bearing fruit.

The company has secured several key customers: Beats by Dr Dre, Tesla and Continental. “Going forward, we expect further new order upside from both existing and new customers to contribute to Memtech’s growth,” states OCBC. The brokerage expects revenue to grow by 4.8% y-o-y in FY15, 10.8% in FY16, and 0.7% in FY17.

Furthermore, the new product mix, coupled with deeper automation efforts in tooling and moulding, can bring about better margins. OCBC expects Memtech’s gross margins to be 17.1% in FY15, 17.3% in FY16, and 18.3% in FY17.

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