Vicplas International - CGS-CIMB Research 2022-07-12: Minor Hiccup From China’s Lockdown

Vicplas International - Minor Hiccup From China’s Lockdown

  • In a press release published in The Business Times on 30 May 2022, Vicplas International (SGX:569)’s management expects the 7,000 sqm Changzhou extension (Changzhou2) to commence operations in Jun 22. However, we think that the opening of Changzhou 2 could be delayed because the Shanghai lockdown likely affected the flow of goods. Vicplas may be facing delays in the delivery of parts/components of its production equipment.
  • We also think the COVID-19 lockdown in China has resulted in a backlog for medical technology devices for Vicplas. In the same article, Vicplas mentioned that 80% of its products manufactured in China pass through the Shanghai port. Although the Shanghai port has since resumed operations, it will take some time to clear the backlog too. Given such a scenario, we believe there will likely be production spillover into FY23F as some orders would not be completed in FY22F.
  • We understand from Vicplas's management that while its medical devices segment has clawback clauses to address cost increases with its customers, these may be reviewed annually and there will be a lag in passing on higher costs.
  • We cut our FY22-23F revenue forecasts for Vicplas by 1.6-3.8% due to COVID-19 related disruptions/delays affecting Vicplas production. We thus cut FY22-23F EPS forecasts for Vicplas by 2.8-18.6%, which lowers our target price for Vicplas to S$0.27, still based on 11x CY23F P/E (FY17-22F average forward P/E).

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

William TNG CFA CGS-CIMB Research | Izabella TAN CGS-CIMB Research | 2022-07-12
SGX Stock Analyst Report ADD MAINTAIN ADD 0.27 DOWN 0.280

Previous report by CGS-CIMB:
2022-03-14 Vicplas International - Resilience In The Face Of Cost Increases

Relevant links:
Vicplas International Analyst Report,
Vicplas International Target Price,

Vicplas International Share Price History,
Vicplas International Announcements,
Vicplas International Dividends/ Corp Actions,
Vicplas International News Articles


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