KUALA LUMPUR: AmInvestment research has cut its FY19F-FY21F earnings forecasts on VS Industry Bhd
by a further 6-15% due to lower printed circuit board assembly revenue.
The research house noted that the lower revenue forecast is tied to reduced contribution from a key customer in 2HFY19 although the group is currently in discussion with more than five prospective MNC customers to fill the excess capacity in its facilities.
VS Industry managing director Datuk SY Gan had said there have been receipts of enquiries from US MNCs looking to shift or diversify their manufacturing bases to Southeast Asia, as a result of the ongoing trade war.
"We concur that VSI is well-equipped to take on these opportunities given its new facilities with 300K sq ft combined production space i.e. its acquired 120K sq ft factory and new 180K sq ft factory," said PublicInvest.
"Furthermore, VSI continues to undergo cost rationalization exercise to streamline its operations in China in light of uncertainties from the US-China trade war, higher operating costs and intense competition faced."
The research house upgraded its call to "buy" from "hold" due to the recent selldown on VS Industry's shares which offers opportunities for investors to accumulate shares, premised on its long-term prospects tied to a solid execution track record.
It lowered the fair value to RM1.04 a share from RM1.31 previously.
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