Year-end uptick expected for VS Industry

HLIB Research said the EMS provider expects the momentum to be sustained into the financial year 2024 supported by the launch of new products by its clients.

PETALING JAYA: VS Industry Bhd (VSI) is expected to see an uptick in its sales orders following the pick up in preparation for the holiday and festive seasons by the end of this year, says Hong Leong Investment Bank (HLIB) Research.

The integrated electronics manufacturing services (EMS) provider expects the momentum to be sustained into the financial year 2024 (FY24) supported by new the launch of new products by its clients, the research house noted in its latest report on the company yesterday.

Many brand owners delayed their product releases this year due to inflationary pressures and softer consumer sentiment.

HLIB Research said “As for Customer Y, the management shared there are signs of gradual increase in orders albeit at a slower pace.

“Despite the expectations from the uptick in sales, we reckon margins will still be challenged especially from increased labour and utilities costs coupled with the under-utilisation of Customer Y in the i-Park facility in Johor.”

VSI registered FY23 core profit after tax and minority interest (patami) of RM195.4mil for FY23, down by 5% year-on-year (y-o-y), which was above the expectations of HLIB Research’s forecast at 112% and 108%, respectively.

The research house’s forecast remained unchanged for now pending an analysts briefing to be held by group.

“After rolling forward our valuation year to FY24 (from calender year 23) our target price increases slightly to 99 sen a share from 84 sen previously based on unchanged 16 times price earnings multiple,” it added.

HLIB Research also reiterated its “hold” call on VSI in view of the volatile market climate and cautious demand.

“We remain wary as demand from major brand owners could still be subdued given the recessionary fears and subdued consumer sentiment,” it noted.

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