SINGAPORE (June 27): OCBC likes Valuetronics Holdings, the integrated Electronic Manufacturing Services (EMS) provider, offering a range of design, engineering, manufacturing and supply chain support services for electronic and electro-mechanical products.
In an unrated report on Tuesday, analyst Joseph Ng says the group has introduced new products which will allow them to increase their exposure to the global trend of increasing Internet-of-Things (IoT) product adoption.
The group’s portfolio comprise two broad business segments, one of which is the Industrial and Commercials Electronics (ICE).
This segment, which contributed 56.6% of FY17 overall revenue, covers a wide spectrum of products such as transaction printers, temperature sensing and high precision GPS devices.
The group has also focused on in-car connectivity modules employed by automakers, following the acquisition of its first customer in the automotive industry in FY16.
The second segment – Consumer Electronics (CE) – contributed 43.4% of FY17 overall revenue and has significant exposure to the consumer lifestyle and lighting divisions of a Dutch MNC, producing products such as electronic toothbrushes and shavers.
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Valuetronics has introduced smart LED lighting products with IoT features to this segment.
The addition of these products are in line with global IoT trends and cater to the increasing demand for mobile connectivity in day-to-day applications, says the group’s management.
This will also give the group opportunities to expand their portfolio.
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In a recent site visit to Valuetronics facilities in Guangdong, China, Ng notes that the group has leveraged on technology to increase its productivity.
“In response to increasing labour costs, as well as to increase efficiency, we note that management has proactively embarked on various initiatives to achieve effective management and allocation of resources across their production floor,” says Ng.
The group’s gross profit margin remained stable at 15.0% in FY17 as compared to 15.2% in FY16.
Meanwhile, net profit margin improved from 6.2% to 6.8%.
As at March 31, the group is in a healthy financial position, with no bank borrowings and HK$752.9 million ($133.9 million) in cash and cash equivalents.
”Looking ahead, with the possible successful qualification by another automaker, further consumer adoption of wireless lighting products with IoT features as well as IoT related products, we believe Valuetronics is well-positioned to continue on its top-line growth trajectory,” says Ng.
At 10.50am, shares of Valuetronics are trading at 81 cents.
