Valuetronics - Maybank Kim Eng 2021-05-31: Bottom May Be Nearing

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

Valuetronics - Bottom May Be Nearing


2HFY21 beat, but expect challenging FY22E; HOLD

  • Valuetronics (SGX:BN2)’s 2HFY21 PATMI of HKD95.6m (+28% y-o-y) was ahead of our estimates, largely due to stronger than expected ICE momentum in 4QFY21.
  • Although Valuetronics expects FY22 to be more challenging than FY21, we raise FY22-23E earnings per share forecast by 10-13%, as we believe the worst of customer allocation losses may be over.
  • Our target price of S$0.60 for Valuetronics is based on 10.6x FY22E P/E (30% discount to SG-peers), from 10x blended FY21-22E previously. Maintain HOLD.



ICE strength offset CE weakness in 2HFY21

  • Revenue rose 20.2% y-o-y to HKD1.19b, as industrial and commercial electronics (ICE) rose 36% y-o-y, benefitting from logistics and printing customers on the back of the COVID-19 driven e-commerce boom. This was also aided by the delayed switch over of the automotive customer to a new vendor for the US allocation of products.
  • In contrast, consumer electronics (CE) was affected by the customer’s switch over to another supplier in ASEAN for its US-allocation, as well as weaker end-market sales. Gross margin improved 1ppt y-o-y to 16.9% due to favourable shift in product mix.


Worst of allocation losses could be over

  • Valuetronics is expecting significantly lower FY22E expansion in Vietnam, we think the worst of customer allocation losses could be over, and this is reflected in our increase of FY22-23E earnings per share.


Vietnam expansion on track






Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-05-31
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.60 UP 0.580



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