PETALING JAYA: VS Industry Bhd expects its strong sales order momentum, which partly lifted its latest fourth-quarter net profit by a whopping 86%, to sustain into the following financial year.
The integrated electronics manufacturing services provider said the launch of new models by its customers would further fuel the sales orders.
“At the same time, the management remains attuned to potential challenges and will persist in exercising prudence to ensure streamlined and efficient operations.
“This is further backed by our lean balance sheet with low net gearing, which gives us agility and serves as a strong financial buffer to navigate any unforeseen contingencies.
“Barring unforeseen circumstances, the board opines that the financial performance of the group for the coming fiscal year will be satisfactory,” it said in a filing with Bursa Malaysia.
In the fourth quarter ended July 31, VS Industry’s net profit surged by 85.7% year-on-year (y-o-y) to RM66.08mil as compared to RM35.59mil in the previous corresponding quarter.
Revenue rose by 15.7% y-o-y to RM1.16bil.
VS Industry said its improved earnings in the current quarter were mainly attributable to higher sales orders from existing customers, coupled with the absence of impairment on investment in associate of RM26.8mil.
In addition, the lower impairment loss on plant and equipment of RM4.7mil recognised during the period also strengthened the bottom line.
“Note that a similar impairment loss on plant and equipment of RM12.4mil was recorded in the previous year’s corresponding quarter,” it said.
Following the stronger bottom line, the group’s earnings per share for the quarter under review were 1.72 sen.
VS Industry’s operations in Malaysia, Singapore and Indonesia remained profitable in the fourth quarter on a pre-tax profit basis.
However, its operations in China continued to sustain losses, given the highly challenging environment in the country.
“In the absence of large orders, the low revenue base was insufficient to cover fixed costs,” it said.
A dividend of one sen has been proposed for the May-to-July 2023 period.
Cumulatively, for financial year 2023 (FY23), VS Industry recorded a net profit of RM183.92mil, which increased by 7.7% year-on-year.
Revenue for the 12-month period rose by 17.5% to RM4.6bil.
The stronger performance in FY23 was achieved on the back of higher sales orders from existing customers as well as more favourable impairment adjustments compared to the previous financial year.
Malaysia, which is the biggest market for VS Industry, saw a 25.3% increase in revenue in FY23 due to stronger orders from key customers.
“Operational costs, however, remained heightened with higher labour costs, electricity tariffs and financing costs,” it said.