Smartphones nearly killed this Singapore stock. Elon Musk saved it
The rise of the smartphone almost broke Tz e-Mon C huang’ s company—El on Musk provided its salvation.
Singapore-based M em tech International has more than doubled its market value in the past year thanks to tie-ups with the likes of Tesla. The manufacturer isa key supplier to Mus k’ s pioneering auto company, making plastic components for its battery packs.
It’ s a far cry from just five years ago, when the seismic shift in the phone industry wrought by the advent of touch-screen devices saw M em tech suffer two straight years of losses. Started by C huang’ s father in 2000, the company had been making millions churning out the plastic keyboards used in mobile hand sets produced by Nokia, Motorola and Ericsson.
“That put the company immediately into a crisis and there was no way back,” the42-year old executive director of the company said in a recent interview. “The e asiest way out was to use the money to invest in a totally different businessb ut the existing equipment would become obsolete.”
Chuang knew he had to reinvent Memtech. Giving himself two years, he looked for ways to use his existing production lines. It was during a conference held by a German customer when he real is ed that he could easily re-purpose his facilities to make automotive parts.
“We did some research and we found there was a trend of putting more plastic in the car to replace the metal parts, to make the car lighter, more fuel efficient and protect the environment ,” C huang said .“We identified a whole list of potential customers .”
The executive opened offices in Germany and Michigan, close to potential clients, and started building prototype sand giving out free samples. Today, Tesla accounts for about 3 percent of M em te ch’ s revenues, according to CL SA. So far, investors like what they see. The stock is near its highest since 2006, reached in January this year, having surged 128 percent in the past 12 months. The company now has a market capital is at ion of about $156 million, four times the $41 million in 2012.“We like the company on strong returns on capital and cash flows ,” Kenneth Tang at Nikko Asset Management Asia said.