Valuetronics Holdings Ltd - OCBC Investment 2017-06-27: Leveraging Technology For Growth

Valuetronics Holdings Ltd - OCBC Investment 2017-06-27: Leveraging Technology For Growth VALUETRONICS HOLDINGS LIMITED BN2.SI

Valuetronics Holdings Ltd - Leveraging Technology For Growth

  • Established since 1992.
  • Integrated EMS provider.
  • Focused on two main business segments.

Integrated EMS provider 

  • Valuetronics Holdings Limited recently hosted a site visit to their production facilities in the Guangdong Province. 
  • Established in 1992, the group is an integrated Electronic Manufacturing Services (EMS) provider, offering a range of design, engineering, manufacturing and supply chain support services for electronic and electromechanical products. The group’s customer base spans across telecommunications, industrial, commercial and consumer fields.

Diverse product offerings with global footprint 

  • The group’s portfolio comprises two broad business segments: Industrial and Commercial Electronics (ICE) and Consumer Electronics (CE).
  • The ICE segment (56.6% of FY17 overall revenue) covers a wide spectrum of products such as transaction printers, temperature sensing and high precision GPS devices. The group’s CE business segment (43.4% of FY17 overall revenue) has significant exposure to the consumer lifestyle and lighting divisions of a Dutch MNC, producing products such as electronic toothbrushes and shavers. 
  • As of FY17, the geographical sales breakdown by shipment destination is as follows: Europe (10.0%), China & Asia Pacific (42.7%), North America (47.3%).

Exposure to IoT trends 

  • Management highlighted the group’s latest product additions which allow them to increase their exposure to the global trend of increasing Internet-of-Things (IoT) product adoption. 
  • In the ICE segment, the group has placed strong emphasis on in-car connectivity modules employed by automakers, following the acquisition of its first customer in the automotive industry in FY16. 
  • In addition, the group has introduced smart LED lighting products with IoT features to its CE product portfolio. Management believes that these products, which cater to the increasing demand for greater mobile connectivity in day-to-day applications, are in line with the global IoT trend, and will allow the group to ride on related opportunities for portfolio expansion. 
  • According to Bloomberg’s consensus estimates, the stock is currently trading at 10.3x FY18F P/E. 
  • We do not have a rating for Valuetronics.

Joseph Ng OCBC Investment | 2017-06-27
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