Introduction to VS Industry Berhad
VS Industry Berhad is a prominent player in the manufacturing sector, specializing in plastic parts and components, contract manufacturing, precision mold making, and the sub-assembly of electronic and electrical equipment. With operations spanning Malaysia, China, and Indonesia, the company is strategically positioned to leverage regional opportunities.
Current Market Position and Stock Data
As of November 20, 2024, VS Industry’s share price stands at RM1.08, with a target price of RM1.35, representing an upside potential of 25%. The company is categorized under the Information Technology sector with a market capitalization of RM4,286.9 million. Major shareholders include the Employees Provident Fund and prominent individual stakeholders.
Growth Prospects and Strategic Initiatives
VS Industry is on track for a significant growth spurt in FY25, driven by leadership in trade diversion and ongoing contract discussions. A share price correction post-briefing presents an attractive entry point for investors. The company has shown resilience despite expectations of a weaker 1QFY25 due to forex challenges, with an 8% cut in FY25 earnings. The strategic change in its main customer’s direction has fostered higher levels of integration among major contract manufacturers, offering VS increased traction with enhanced supply chain flexibility and a broader product range.
Financial Performance Overview
For FY24, VS Industry reported net turnover of RM4,248 million, with expectations to increase to RM4,849 million in FY25. EBITDA is projected to grow from RM413 million in FY24 to RM486 million in FY25. The company’s net profit adjusted figures show a steady increase, with FY24 at RM210 million and a forecast of RM254 million for FY25. Margins are slightly impacted by forex fluctuations, yet the company maintains a robust financial position with a net cash/share of RM0.04.
Strategic Expansion and New Opportunities
VS Industry has expanded its regional footprint by incorporating a new subsidiary in the Philippines, VS Industry Philippines. The company has secured a lease for a factory building in Batangas and new orders for consumer electronics products, with expected recurring revenue of RM300 million for FY25. This move is expected to enhance order visibility and leverage favorable export tariffs from the Philippines to the US.
Valuation and Recommendations
UOB Kay Hian maintains a BUY recommendation with a revised target price of RM1.35, based on an 18.5x 2025F PE. The company’s current valuation is considered favorable, supported by solid fundamental catalysts and a strategic position in the market.
Environmental, Social, and Governance (ESG) Initiatives
VS Industry is committed to sustainability and social responsibility, evidenced by its ISO 14001:2015 certification for environmental management. The company has achieved a 99.8% vaccination record for its workforce and proactively engages with migrant worker rights specialists. Governance is strengthened by an Anti-Corruption Framework aligning with Malaysian legal requirements.
Concluding Remarks
VS Industry Berhad is well-positioned for growth in FY25, supported by strategic expansions and robust financial performance. The company’s proactive approach to ESG issues further enhances its market appeal, making it a compelling investment option for stakeholders.
