MALAYSIA’S top three electronics manufacturing services (EMS) provider VS Industry Bhd is bullish about its demand outlook with orders from customers continue to be robust.
In fact, the company has recently secured new orders from our existing key customers, according to its managing director Datuk S.Y. Gan.
“FY2021 was an exceptional year for us as the group delivered its highest-ever net profit of RM245.4 mil against the backdrop of a very challenging environment,” commented VS Industry’s managing director Datuk S.Y. Gan after the company’s annual general meeting (AGM).
“With the strong order flow to sustain into the near future, we have allocated circa RM150 mil in capital expenditure to expand and enhance our capacity and capabilities.”
In November 2021, the group spent RM30 mil to acquire three parcels of adjacent land measuring 386,381 sq ft or 8.9 acres in Senai, Johor for future capacity expansion.
“Looking ahead, our focal point remains on providing top quality delivery on a timely basis to our customers while maintaining the standard of excellence in our execution,” envisages Gan.
“Simultaneously, given the group’s cognisance of the high importance on ESG (environmental, social, governance) matters, we are investing further efforts and resources to strengthen our ESG initiatives.”
In its FY7/2021, VS has resumed its quarterly dividend payout practice. Total dividend in FY7/2021 should amount to about RM113.8 mil, representing a 46.4% payout based on net profit of RM245.4 mil. The group has a dividend policy of a 40% payout of net profit.
In its company update dated Dec 20 last year, AmResearch said it remained positive on VS Industry’s longer term outlook, underpinned by the company’s:
- Ability to offer turnkey electronic manufacturing services solutions as a vertically integrated player;
- Customer diversification efforts with opportunities arising from the US-China trade war diversion; and
- Improving overseas operations underpinned by higher sales order from its Indonesian segment as well as improving cost rationalisation initiatives in China.
All-in-all, the research house reiterated its “buy” rating on VS Industry with a fair value (FV) of RM1.61/share which is pegged to an unchanged FY7/2023F price-to-earnings ratio (PE).
At 2.36pm. VS Industry was down 1 sen or 0.75% to RM1.33 with 3.26 million shares traded, thus valuing the company at RM5.09 bil. – Jan 7, 2022
