Valuetronics Holdings Limited announced its net profit after tax for FY2023 grew 8.3% to HK$123.0 million from HK$113.5 million in FY2022.
Mr Ricky Tse Chong Hing, Chairman and Managing Director of Valuetronics commented: “The Vietnam campus has been steadily ramping up its production capacity. Towards the end of FY2023, we successfully commenced production with two new customers, including a hardware provider for retail chain stores and a customer providing cooling solutions for high-performance computing environments. Additionally, we recently secured two more new customers, one of which supplies electronic products to a leading global entertainment conglomerate, while the other is a network access solutions provider based in Canada. These successful customer acquisitions demonstrate the effectiveness of our regional manufacturing strategy, which aims to create diversified supply chains that leverage the cost advantages of lower labour rates across various Asian countries. Despite the challenging macroeconomic environment, we maintain confident in our ability to navigate forward.”
Dividend
After taking its FY2023 results performance and the challenging business environment into account, Valuetronics has proposed a Final Dividend of HK 10 cents per share and a Special Dividend of HK 6 cents per share for FY2023.
Together with the Interim Dividend of HK 4 cents per share paid out in December 2022, the aggregate dividend for FY2023 amounts to HK 20 cents per share, which is 68% of the net profit attributable to shareholders for FY2023.
Financial Highlights
Revenue for FY2023 decreased slightly by 0.7% to HK$2,013.7 million, whereas gross profit decreased by 4.8% to HK$261.7 million due to the severe component shortage in the first half of FY2022, which resulted in increased component prices and a decline in the gross profit margin on a full year basis. However, Valuetronics experienced a recovery in the gross profit margin in the second half of FY2023 due to some respite in the component shortage.
The ICE segment’s revenue rose by 19.7% to HK$1,580.3 million, mainly due to increased demand from some ICE customers, including several new customers. This was offset by a 38.7% dip in CE revenue to HK$433.4 million, largely due to softening demand in end-markets.
Valuetronics’s other income jumped 117.5% to HK$32.0 million as interest income was boosted from the U.S. Fed’s raising of interest rates. Selling and distribution expenses increased slightly by 1.1% to HK$21.9 million, while administrative expenses for FY2023 decreased by 1.9% to HK$138.9 million.
As a result of the above, net profit in FY2023 increased by 8.3% to HK$123.0M, which translates into an earnings per share of approximately HK 29.1 cents for FY2023 as compared to HK 26.1 cents for FY2022.
Resilient Financial Position
As at 31 March 2023, Valuetronics maintains its resilient financial position with a net asset value per share (excluding treasury shares) of HK$3.3, net current assets of HK$993.3 million, total assets of HK$2,075.9 million, and shareholders’ equity of HK$1,362.0 million. Furthermore, Valuetronics continues to have no bank borrowings and is supported by its strong operating cash flows, with cash and cash equivalents of HK$1,009.9 million.
Business Outlook
Valuetronics continues to operate in a challenging macro-environment, with interest rate hikes and rising inflationary pressures continuing to impact consumer spending patterns. In addition, geopolitical tensions, including the ongoing Russia-Ukraine conflict, and the potential ramifications of the US regional banking crisis, also continue to generate cautious market sentiments.
Customers have deferred orders to manage inventory levels due to weakened market demand, which has an adverse impact on the Valuetronics’ revenue. Furthermore, despite some respite in the component shortage problem, significant reductions in component costs and improvements in lead time did not materialise, and are expected to exert pressure on the Group’s gross profit margins in FY2024.
Despite the challenging environment, Valuetronics’ manufacturing site in Vietnam has yielded positive results, by attracting new customers seeking to diversify their supply chains, and benefiting from lower labour costs in different countries across Asia.
This move positions Valuetronics well to capitalise on evolving global supply chain dynamics in its customer acquisition strategy. Towards the end of FY2023, Valuetronics has successfully commenced initial shipments to a hardware provider for retail chain stores and a customer providing cooling solutions for high performance computing environments. Valuetronics foresees full year revenue contribution from these two new customers in FY2024 which will also contribute to the diversification of revenue streams.
In addition, Valuetronics has recently secured an additional two new customers. One is a supplier of electronic products to a leading global entertainment conglomerate, whilst the another is a network access solutions provider based in Canada. Their initial shipments will commence in 2HFY2024, and they are expected to ramp up production in FY2025.
Despite the challenges ahead, Valuetronics expects to remain profitable for FY2024. To increase shareholders’ value and improve return on equity, a HK$250 million Share Buyback Program was announced on 28 February 2022. Since then, HK$65 million has been utilised to repurchase 22 million company shares, and Valuetronics intends to continue with this Program.
Valetronics’ share price as of 30 May 2023 after market close was S$0.540.
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About Valuetronics Holdings Limited
Valuetronics Holdings Limited was listed on the SGX Mainboard in 2007 and is currently a constituent stock on the FTSE ST Small Cap, FTSE ST China and FTSE Global Micro Cap Indices. Valuetronics is an Electronic Manufacturing Service (“EMS”) provider which focuses on the design and development of products that meet the ever-changing needs of customers. It is the preferred choice of several successful global companies that are involved in consumer electronics and industrial and commercial electronics products, with core competencies ranging from tool fabrication, injection moulding, metal stamping, machining, surface mount technology (“SMT”) and finished product assembly on full turnkey basis. Valuetronics’ EMS business is classified into two reportable segments namely consumer electronics products and industrial and commercial electronics products. Headquartered in Hong Kong, the Group’s China manufacturing facility is located in Long Shan 2nd Road, Western District of Science and Technology Park, Dayawan Economy and Technology Development District, Huizhou City, Guangdong Province, PRC. The Group’s Vietnam manufacturing facility is located at Plot No. C14-15-16-17, Thang Long Industrial Park (Vinh Phuc), Thien Ke Commune, Binh Xuyen District, Vinh Phuc Province, Vietnam.
