Micro-Mechanics: A Black Horse?

Technicals

Looking at the chart (4H) it can be seen that Micro-Mechanics has broken the resistance of the downward channel. It is currently moving sideways and the RSI is also in the middle which does not show any definite momentum yet. However a good point of entry for swing/position trading would be entering at the 50EMA as based on the trend 5DD tends to stay above the 50EMA

Fundamentals

5DD.SI, Micro-Mechanics have recently caught the attention of many due to its sky rocketing share price. Since the March crash due to panic selling, it has rallied for more than 100%. According to International Data Corp, consumer semiconductor segment will grow at a CAGR of 6.4% during 2018-2023 on the back of consumer IoT devices and home automation gaining traction and scale.

Prospects for Micro-Mechanics looks great ahead with Joe Biden winning the election. Biden is expected to take a more nuanced approach when dealing with relations with the world's second largest economy. This is especially important for small firms such as Micro-Mechanic which according to its 1QFY2021 financial highlight, operations in China accounted for 30% of its revenue.

One important thing to note is that Micro-Mechanics does not have any long term debt obligation. Coupled with high net operating cash flow, this is a jab in boost of confidence given the volatility and uncertainty that the COVID-19 pandemic has brought to global markets.

Lastly, it is important to look at the dividend yield. For the past 5 years, Micro-Mechanics have been steadily increasing its dividend even in FY2020 when an pandemic is on-going. We expect this dividend to be around 4.5% to 5% in FY2021.

Conclusion: Based on the technical analysis be prepared for some sideways movement before a continuation in upward trend . Based on the Fundamentals Micro-Mechanic would be a good buy if you are planning to invest and hold long term.