Valuetronics - Maybank Kim Eng 2020-02-20: Impact Of Covid-19 Priced-in

VALUETRONICS HOLDINGS LIMITED (SGX:BN2) | SGinvestors.io VALUETRONICS HOLDINGS LIMITED (SGX:BN2)

Valuetronics - Impact Of Covid-19 Priced-in


Priced in; maintain BUY

  • Due to the Covid-19 outbreak in China, Valuetronics (SGX:BN2) is facing difficulties meeting originally planned delivery schedules. Valuetronics warns that this may result in 2HFY20 revenues to be lower y-o-y.
  • We reduce FYMar20E EPS by 12% to factor delayed deliveries, but leave FY21-22E unchanged, as we believe longer-term fundamentals are intact.
  • ROE-g/COE-g Target Price is reduced to SGD0.94, based on 1.9x FY20E P/B (prev: 2x).
  • BUY for attractive dividend yields of 6-7% while awaiting growth to return.



Delay in achieving pre-CNY production levels

  • Both of Valuetronics’s plants in Huizhou, Guangdong, estimated to account for more than 90% of normal production capacity, have resumed operations this week. However, various measures implemented to curb the Covid-19 outbreak in China, such as the shutdown of cities and limited transportation facilities, have delayed the return of some workers. This in turn will delay Valuetronics achieving pre-CNY production levels, hence affecting delivery timelines.


Longer-term growth drivers intact

  • Our FY21-22E forecasts are largely unchanged as we expect Valuetronics to resume normal production levels when all workers return. Furthermore, Valuetronics remains steadfast on expansion plans in Vietnam, a key long-term growth driver.
  • We also expect Valuetronics’s products, such as smart-LED, in-car connectivity modules, and transaction printers, to resume growth once cyclical headwinds fizzle out.


Buy the dips






Lai Gene Lih CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-02-20
SGX Stock Analyst Report BUY MAINTAIN BUY 0.94 DOWN 0.980



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