Short earnings visibility, but second half likely to turn positive: The MIT’s sales visibility is less than three months as its customers do not provide order book forecast. As of August 2008, the group has clinched an order book of S$14 million, on par with first half sales. As there are several months away before the year end and no significant writedown or provision is expected, we believe MIT would fare better in second half than first half.

Balanced growth strategy is yet to be seen: To reduce the exposure to semiconductor industry, MIT has been steering the firm towards more diversified business. MIT aims to achieve balanced growth in three core business segments - OEM semiconductor equipment, contract equipment manufacturing and precision machining. Despite that, Westcomb are of the view that the goal is far from attainment as contribution from the new business segments are still insignificant.

A mild recovery in 2009: Westcomb believe there will be a mild recovery in 2009 given (1) IC price may stabilize due to capital reduction, (2) 70 fabs construction project, and (3) forced consolidation in semiconductor industry. Gartner recently projected overall semiconductor capital spending in 2008 to tumble 22.4% yoy, followed by a recovery of 7.6% in 2009 as
the oversupply condition is resolved.