Valuetronics - UOB Kay Hian 2024-06-05: FY24 Within Expectations; New Customers To Start The Next Chapter Of Growth

• Valuetronics's FY24 gross profit grew 1% y-o-y as margins expanded from its rebalanced customer portfolio, offsetting revenue decline due to lower material costs, improved supply chain visibility and lower labour costs.
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FY24 earnings in line with expectations.

• Valuetronics (SGX:BN2)’s FY24 net profit of HK$160m (+30% y-o-y) was in line with our expectations, equal to our full-year estimate.
• Revenue fell 17% y-o-y to HK$1,670m, on lower demand from some existing industrial and commercial electronics (ICE) and consumer electronics (CE) customers. However, gross profit improved 1.3% y-o-y to S$265m. Interest income also jumped 160% y-o-y to HK$55m from US Fed rate hikes, contributing to the improved net margin (+3.5ppt y-o-y)..

Gross margin expansion on better portfolio mix.

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• Valuetronics's gross margin expansion was also attributable to the following factors:
  1. stabilising material costs from component shortage relief due to improved supply chain visibility, and
  2. lower labour costs and manufacturing overheads in China due to depreciation of the Renminbi.

25% y-o-y higher total dividend for FY24.

• Read more at SGinvestors.io.

John Cheong UOB Kay Hian Research | Heidi Mo UOB Kay Hian | https://research.uobkayhian.com/ 2024-06-05 SGinvestors.io

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