Performance dragged by US facility. Micro-Mechanics (MMH) turned in a rather mixed set of 1Q09 results yesterday. Revenue rose 22.3% YoY (+19.4% QoQ) to hit a record S$11.7m, aided by supernormal 302.5%
YoY growth from its Custom Machining and Assembly (CMA) division, boosted by its recent acquisition of California-based AMP3.

Worrisome outlook ahead. While the quarterly results are largely within OCBC expectations, the market dynamics have now called for an increasingly challenging and uncertain operating environment for MMH, especially with its exposure to the beleaguered semiconductor industry. And while there has been strong topline contribution from its new CMA manufacturing operations in the US, the subsidiary is unprofitable and is expected to be remain so for the next few quarters.

Maintain HOLD ; Fair Value: S$0.38