AmBank Research pointed out that the company's customer partnerships are strengthening and demand should eventually normalise.
PETALING JAYA: VS Industry Bhd
(VSI) may see a non-linear path to recovery moving forward, given external uncertainties.
This may cause the group to emerge on a stronger footing moving forward, which may mean a stronger second half of financial year 2026 (2H26), according to some estimates.
AmBank Research highlighted the group’s return to profitability in its latest quarterly report, pointing out that its customer partnerships are strengthening and demand should eventually normalise.
“VSI swung back to a core profit of RM28mil (for the first quarter ended Oct 31) versus losses of RM30mil in the previous corresponding quarter.
“We deem this in line, at 20% of ours and 21% of consensus estimates. Reported margins were at 2.6%, but this still absorbs RM9mil losses from the Philippines and RM2mil from HT Press,” it said.
AmBank Research explained its rationale for its expectations that VSI’s earnings could improve from here on.
This is due to factors including its expectations that the Philippines segment should breakeven and eventually turn profitable, as volumes ramp up.
“The Philippines currently generates sales at US$5mil per month, short of the US$10mil per month required to breakeven. A new model is expected to commence production in December 2025, lifting throughput, with aims to breakeven in March 2026.
“Following that, a new pool cleaner customer is scheduled to start production towards the end of the first quarter (1Q26).”
Having said that, it noted the recovery is unlikely to be linear since 2Q26 is expected to be a seasonally softer season as customers trim inventory, and a potentially stronger ringgit could temper its revenue.
Furthermore, AmBank Research noted VSI returned to a net cash position in FY25 as dividend payments were resumed in the quarter at 0.4 sen per share.
