KUALA LUMPUR: JF Apex Research has started coverage of VS Industry with a target price of RM1.50 and advised investors to accumulate the stock amid current share price weakness.
It said on Friday its fair value for VS renders 27% potential capital appreciation to investors coupled with its decent dividend yield of 4%-5%.
The research house said the target price of RM1.50 based on 12.5 times FY2017F PE with diluted EPS forecast of 12 sen.
“The price earnings ratio (PER) assigned for valuation of VS is at the sector average PE and +2 standard deviation above mean of historical PE of the Group.
JF Apex Research said the target PE is warranted as VS can secure sizeable orders from Dyson and its potential strategic acquisition of a healthcare and wellness company under its China operation to further expand its earnings in FY17F.
“Growth remains intact albeit absence of ‘forex play’. Despite share price falling 25% year-to-date due to rebound of the ringgit against the US dollar and across-the-broad selling pressure on export oriented counters, we believe VS still commands a resilient business model, which is able to provide fully integrated assembly services for electronics manufacturing services (EMS) ranging from plastic injection moulding, production of printed circuit board (PCB), battery packs and sub/full assembly of consumer electronic products.
“It is a leading global EMS provider, ranked 31st largest in the world, according to the manufacturing market insider, along with other prestigious names like Foxconn and Flextronics,” it said.
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