Revenue in FY08 declined 18.1% to S$32.3m, mainly attributable to the slowdown in the semiconductor. Gross profit margin ("GPM") declined slightly from 28.6% to 28.5% despite lower revenue base. The stable GPM was the reflection of low fixed cost and high production flexibility.

Selling and marketing expenses declined 4.2%, in line with lower revenue base. Administrative expenses slid 5.8% to S$5.9m due to lower revenue and 10-15% pay cut instituted for its senior management. Impairment in value of inventories amounted a hefty S$3.1m due to lower net realizable values for inventories.

Cash decreased S$9.1m to S$18.2m was mainly due to S$5.6m from higher working capital requirement, S$1.0m from purchase of UOB preference shares and S$1.5m from development project expenditure.

We maintain our FY09-10 forecast. While sales of distribution segment remained relatively unchanged at S$5.1m in FY08, manufacturing segment reduced by 21% to S$27.2m due mainly to sagging demand. The decline in semiconductor equipment business has not bottomed out yet. The overcapacity in the industry has already taken tolls on some chipmakers, leading to bankruptcy and consolidation of industry players. As such, 2009 is another tough year for MIT to turnaround given that new capex on semiconductor equipment may be pushed further back.

We prefer to adopt conservative stance on valuation grounds by applying discount to FY09 NTA. Based on 0.40xNTA per share FY09, we derive a target price of S$0.07. Downside potential is also limited by its strong balance sheet hoarded with 8.2 Sg cts cash per share and virtually zero debts. Maintain HOLD.