Valuetronics Holdings Limited’s net profit for the six months ended 30 September 2023 (“1HFY2024”) grew 42% to HK$82.1 million from HK$57.9 million in 1HFY2023.
Financial Highlights
Valuetronics’ revenue for 1HFY2024 decreased by 15.2% to HK$891.3 million, whereas gross profit increased by 5.8% to HK$138.9 million with gross profit margin increasing to 15.6% due to more stable material costs as component shortage issues faded. In addition, direct labour costs in China have also normalised due to a more stable labour supply and the depreciation of the Renminbi.
Valuetronics’ ICE revenue decreased by 18.5% to HK$656.6 million. Although Valuetronics recorded revenue contribution from several new ICE customers, this was offset by a decrease in
demand from some existing ICE customers. CE revenue also decreased by 4.6% to HK$234.7 million mainly due to the softening demand in end-markets.
Valuetronics’ other income in 1HFY2024 rose 123.0% to HK$28.8 million, mainly due to the US Fed lifting of interest rates which boosted interest income. Selling and distribution expenses decreased by 13.1% to HK$10.5 million for 1HFY2024 in line with the decrease in revenue, while administrative expenses decreased slightly by 1.2% to HK$65.9 million.
As a result of the above, net profit in 1HFY2024 increased by 42.0% to HK$82.1 million, which translates into an earnings per share of HK 19.8 cents for 1HFY2024 as compared to HK 13.5 cents for 1HFY2023.
As at 30 September 2023, Valuetronics has a net asset value per share (excluding treasury shares) of HK$3.3, net current assets of HK$1,013.8 million, total assets of HK$2,108.5 million, and shareholders’ equity of HK$1,367.0 million. Valuetronics continues to have no bank borrowings as at 30 September 2023 and is supported by cash and cash equivalents of HK$1,143.2 million.
Dividend
Valuetronics has declared an interim dividend of HKD 4 cents per share, and a special interim dividend of HKD 4 cents per share to reward shareholders for their continuous support by sharing the improved interest income during this interim period. Both are payable on 1 December 2023.
Mr Ricky Tse Chong Hing (“谢创兴”), Chairman and Managing Director of Valuetronics commented: “The
Board has decided to declare a special dividend in addition to the interim dividend for 1HFY2024 to share with shareholders the higher interest income we have received because of the rise in interest rates. Despite the challenging macro environment, we have managed to onboard customers in new and various sectors who will help to further diversify our revenue. We will continue to leverage our Vietnam and China campuses to provide diversified manufacturing solutions and seize opportunities to acquire new customers.”
Business Outlook
The operating environment remains challenging, however the visibility of the component supply chain has greatly improved, which has led to more stable costs in terms of materials. Direct labour costs and manufacturing overheads in China have also improved following the depreciation of the Renminbi. These have collectively contributed to an improved gross profit margin, while rising interest rates have also had a positive impact on the Group’s interest income.
However, challenges from the macro environment such as high inflation and rising geopolitical tensions
continue to shake business confidence and decrease revenue contribution from some customers. Valuetronics is working closely with affected customers to mitigate these risks.
Nevertheless, Valuetronics’ strategic efforts to diversify its customer base have yielded positive results. Customers that were acquired last year, which include a hardware provider for retail chain stores, and a
customer providing cooling solutions for high performance computing environments, are now contributing revenue.
The trial production of the two customers acquired earlier this year, which includes a customer supplying
electronic products to a leading global entertainment conglomerate, and a network access solutions
provider based in Canada, is proceeding as scheduled and initial shipments are expected in the second
half of 2023, with full year revenue contribution in FY2025.
These new customers come from industries different from Valuetronics’ existing customers, highlighting
their ability to successfully expand into new sectors. However, further growing these new customers through the allocation of new projects allocation will take time, and their contribution may not be able to fully compensate for the revenue decline from existing customers due to the global economic slowdown.
Considerable uncertainty surrounding the global economy risks pushing some economies into a recession, and Valuetronics will prioritise customer acquisition efforts and leverage its Vietnam solution to seize new business opportunities, emphasising diversification as a strategic imperative, and expects to remain profitable for FY2024.
To increase shareholders’ value and improve the return on equity, a HK$250 million Share Buyback Program was announced on 28 February 2022. Since then, HK$68 million has been utilised to repurchase an 22 million company shares, and Valuetronics intends to continue with the Share Buyback Program.
Valuetronics’ share price as of 9 November 2023 before market open was S$0.54.
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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.
