14HKcts per lot doubled last year HK7cts as co made record profits ,expect to continue....not really a S chip but co owned by Hongkee
Valuetronics Holdings: Ends FY11 on a high
By Andy Wong
Thu, 26 May 2011, 09:26:05 SGT
Valuetronics Holdings Limited (VHL) ended FY11 on a high, and this was within our expectations. Revenue jumped 73.4% to HK$1.97b, or 4.6% above our estimates. Net profit surged 106.3% to HK$121.2m and was just 0.4% higher than our full-year forecast. A first and final dividend of 14 HK cents was declared (versus 7 HK cents in FY10), which implies a payout ratio of 41.2% and a healthy yield of 9.0%. The positive earnings momentum was driven by strong demand from its major customers for both its OEM and ODM businesses. Looking ahead, we expect VHL to continue to benefit from the launch of new products and the growth of its major OEM and ODM customers, albeit at a more moderated pace. We raise our revenue and earnings forecasts for FY12 by 6.7% and 3.9% respectively although we have also factored in slightly lower margin assumptions due to rising cost pressures. We also introduce our FY13 estimates and roll-over our valuation to 8x FY12F EPS. As such, our value fair estimate increases to S$0.49 (previously S$0.47). Maintain BUY.
FY11 results within expectations. Valuetronics Holdings Limited (VHL) reported its 4QFY11 results with revenue growth of 73.2% YoY and 1.4% QoQ to HK$531.9m. Gross profit surged 72.1% YoY and 6.6% QoQ to HK$86.4m, while net profit rose 27.6% YoY but declined 11.0% QoQ to HK$28.1m. FY11 results were in line with our expectations, with revenue increasing 73.4% to HK$1.97b, which was 4.6% above our estimates. Bottomline jumped 106.3% to HK$121.2m and was just 0.4% higher than our full-year forecast. A first and final dividend of 14 HK cents was declared (versus 7 HK cents in FY10), which implies a payout ratio of 41.2% and a healthy yield of 9.0%. Management highlighted that dividend payout ratio will be maintained at above 30% moving forward.
Strong contribution from OEM and ODM segments. Earnings momentum for the quarter and FY11 was driven by strong demand from its major customers for both its OEM and ODM businesses. Looking ahead, we expect VHL to continue to benefit from the launch of new products and the growth of its major OEM and ODM customers, especially since some of them are seeking to penetrate into new territories. We expect this growth to come at a more moderated pace though, after an exceptional growth phase in FY10. We are also encouraged by the revenue contribution from its new licensing business segment (fourth quarter of contribution), which we opine will be its new growth driver moving forward. VHL is looking to expand its product portfolio and expand its sales and distribution networks in this area. Despite the growth potential it brings, upfront expenses incurred had adversely affected the operating result of this segment for FY11.
Working capital eases. A further positive sign we note was that net cash generated from its operating activities has now turned positive (HK$37.3m) from -HK$62.8m three months ago. This was due to the reversal in trend of ballooning working capital needs. Hence bank and cash balances increased substiantially from HK$37.2m as at 31 Dec 2010 to HK$136.2m as at 31 Mar 2011.
Maintain BUY. We continue to like VHL for its strong management, diversified product range and attractive dividend yield. We raise our revenue and earnings forecasts for FY12 by 6.7% and 3.9% respectively although we have also factored in slightly lower margin assumptions due to rising cost pressures. We also introduce our FY13 estimates and roll-over our valuation to 8x FY12F EPS. As such, our value fair estimate increases to S$0.49 (previously S$0.47). Maintain BUY.
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