RHB Research has maintained its buy call on VS Industry Bhd (VSI) with a new target price of RM1.47 on the back of expected rising global demand for consumer electronics.
The integrated electronics manufacturing services (EMS) provider boasted a “robust” pipeline for new jobs on the back of heightened trade tensions, “and we believe positive news flow will lift stock sentiment,” RHB analyst Soong Wei Siang wrote in a note today.
Soong added that demand for consumer electronics had picked up “with consumers spending longer hours at home due to the Covid-19 pandemic”.
This trend would give EMS providers such as VSI a leg up as the group is well diversified in various product categories, he added.
Also, following the easing of the pandemic lockdown across the globe, “potential customers that were earlier exploring the option of relocating their manufacturing source to Malaysia have resumed conversations with VS Industry,” he said.
In this respect, the trend tensions augured well for the company and could serve as an earnings growth kicker, he added.
“In view of its established track record and reputation, we are optimistic of its chances of getting new customers on stream by FY21F,” Soong said.
Risks to his recommendation include loss of key customers and a delay in securing new customers.
VSI shares opened RM1.26 or 2.44% after the morning bell, giving it a market capitalisation of RM2.37 bil. – July 17, 2020
