VSI's weaker net profit of RM37.9mil in Q2FY19 brought net profit in 1HFY19 to RM77.8mil, which was broadly in line with the research house's and consensus numbers.
The net profit included a RM2.4mil disposal of gain and a RM4.3mil foreign exchange gain.
Revenue for 2QFY19 came in at RM982.6mil underpinned by its Malaysian operations with Indoensia and China experiencing greatly diminished work orders.
"While the 7.3% sequential drop in its Malaysian-based revenue may well be seasonal, the decline warrants noting for signs of more pronounced structural weaknesses nonetheless, in line with previously-communicated softening in orders from certain key customers," said PublicInvest.
Moving forward to 2H, PublicInvest expects weaker numbers in line with previous expectations of a demand slowdown in its Malaysian operations.
However, the research house says there will be a pickup in FY20 onwards from recently secured work orders from Bissell, with a number of other new clients reportedly on the cards.
"Estimated annual contract size from its newly-secured customer, Bissell, could range between RM500m and RM1bn when fully up and running, with expected lifts to bottom line likely to be fairly promising," said PublicInvest.
"Capital expenditure requirements are not significant, with an estimated RM5m allocated for the installation of assembly lines."
PublicInvest noted that it remains wary of a lack of clarity on the group's relationship with an existing key customer, for which it does the full suite of EMS-related businesses despite having received additional orders for a particular product.
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