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4 Promising Electronics Companies to Ride the Smart Nation Wave

Royston Yang
Semiconductor circuit board

Singapore has a long-term vision of being a Smart Nation, and Prime Minister (PM) Lee Hsien Loong spoke on this at the Smart Nation Summit held in June this year. This vision was outlined five years ago as Singapore transitioned to a wired and connected economy, and with a technologically-literate population, easy access to smartphones and laptops, as well as good IT infrastructure, the vision has progressed well over the years.

PM Lee also outlined three important characteristics for Singapore in order to make the Smart Nation initiative a reality: strong engineering capabilities, more leaders and managers who can differentiate between what is real and what is fluff, and a society that embraces science and technology instead of fearing it.

On the first point, I believe we have many companies in Singapore that are strong in electronics engineering and electrical components, and they are the ones who can contribute meaningfully to this vision coming true.

Here are four promising electronic component companies you can invest in to ride this trend.

1. AEM Holdings Ltd

AEM Holdings Ltd (SGX: AWX) provides solutions in equipment systems, precision components, and related manufacturing services. The group has four manufacturing plants located in Singapore, Malaysia, China, and Finland.

In its H1 2019 earnings, AEM reported an 8.9% year-on-year increase in revenue, while net profit jumped 26% year on year to S$22.3 million.

2. Micro-Mechanics (Holdings) Ltd

Micro-Mechanics (Holdings) Ltd (SGX: 5DD) designs, manufactures, and markets high-precision parts and tools used in semiconductor and other high-tech industries. The group has five manufacturing facilities in Singapore, Malaysia, China, the Philippines, and the US.

For FY 2019 (ended 30 June 2019), MMH reported a drop in revenue of 7.3% year on year due to cyclically slower conditions in the semiconductor industry. Net profit declined by 24.5% year on year to S$12.9 million. However, the group maintained its overall dividend per share at S$0.05 for its final dividend and S$0.01 for the special dividend.

3. Venture Corporation Limited

Venture Corporation Limited (SGX: V03) is a global provider of technology solutions, products, and services. The group has built up capabilities and know-how in key technology domains such as life sciences, genomics, networking and communications, and financial technology.

For H1 2019, Venture’s revenue inched up 1.3% year on year to S$1.8 billion, while net profit crept up by a mere 0.1% year on year to S$181.7 million.

4. Valuetronics Holdings Limited

Valuetronics Holdings Limited (SGX: BN2) is an electronics manufacturing service provider that produces components and parts for consumer electronics and commercial electronic products. The group is headquartered in Hong Kong, and its manufacturing facility is located in Guangdong Province in China.

For its Q1 2020 earnings, revenue fell by 7.1% year on year to HK$654.3 million while net profit declined slightly by 3.1% year on year to HK$48.1 million.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of AEM Holdings Ltd and Micro-Mechanics (Holdings) Ltd. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.

Motley Fool Singapore 2019