Vicplas International - CGS-CIMB Research 2022-09-26: Pressured By Higher Costs

Vicplas International - Pressured By Higher Costs

  • Vicplas International (SGX:569)'s 2H22 (1-Feb-2022 to 31-Jul-2022) revenue of S$67.6m (+6.8% h-o-h; +17.6% y-o-y) was 56.2% of our FY22F forecast. This brought FY22 revenue to S$130.8m (+14.8% y-o-y).
  • In FY22, Vicplas added more borrowings to finance working capital requirements arising from the higher revenue growth. Finance costs rose to S$0.5m ( +73.2% h-o-h; +90.0% y-o-y). Hence, 2H22 net profit fell to S$3.8m (-23.8% h-o-h; - 29.4% y-o-y), which dragged FY22 net profit down to S$8.8m (-15.0% y-o-y), but still largely in line at 98.2% of our FY22F estimates.
  • In its medical devices segment, 2H22’s improved revenue of S$47.6m ( +5.9% h-o-h; +20.1% y-o-y) was offset by higher operating costs relating to supply chain, COVID-19 disruptions, and business expansion. Vicplas is also scaling up its headcount and investing in medtech talents to meet future demand. We think this explains the +9.9% h-o-h (+20.1% y-o-y) increase in employee costs to S$20.9m.
  • According to Vicplas, the Changzhou extension (Changzhou2) was completed at end-FY22 and is expected to contribute to 1H23 revenue. Management also confirmed that the existing plant is fully utilised and there are new projects that will utilise plant 2. At the same time, Vicplas is also working to clear the order backlog arising from the impact of the COVID-19 lockdown in 2HFY22.
  • Vicplas is also actively negotiating for a site in Juarez, Mexico, which would be its fifth manufacturing location . We think that Vicplas will likely lease this site and capex requirements would only be needed for fitting and equipment. Management hopes that this new plant could be ready by end-Jun 2024.
  • Our FY23F and FY24F net profit forecast for Vicplas are unchanged, though EPS are reduced slightly by 0.01% due to the increased number of shares. We also introduce FY25F forecasts. Our unchanged target price of S$0.27 for Vicplas is 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 | 2022-09-26
SGX Stock Analyst Report ADD MAINTAIN ADD 0.270 SAME 0.270

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

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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