VALUETRONIC (3 Mar 2021 - 0.61)

Segmentation

Consumer Electronics (CE) - smart LED lighting products with Internet-of-Things (“IoT”) features

Industrial and Commercial Electronics (ICE) - Automotive and Printer.

Financial - 1H2021 (Mar 2020 - Sept 2020) 

Revenue dropped 20 percents and gross profit dropped 10 percents due to Covid restriction on China. 

Consumer Electronics revenue decreased by 35.8% to HK$365mil due to reduced demand under Covid-19

Industrial and Commercial Electronics revenue decreased by 8.6% to HK$729.8 mil due to reduced demand under Covid-19.

"There was significant drop in sales to the auto customer as a result of declines in global vehicle production. Such negative impacts were partly offset by the relatively stable revenue contribution from a printer customer which benefits from e-commerce sales; and a sensing devices customer which benefits from its product’s application in logistics industry"

Balance Sheet

Trade receivable increased 51percents  from 326mil to 513mil, but trade payable also increased 48percents from 291mil to 433mil. Cash rich company with 1billions on hand. 

Cash flow statement

CFFO is good, company invested 34mil in PPE to expand their company in Vietnam. Due to tax tariff, company has moved their production to Vietnam to avoid the 25% tariff. 

Events for next reporting or next 12 months

Construction of the Group’s own Vietnam campus has started in July 2020, while the 4,000 square meters leased factory, just few miles away from the Vietnam campus, has commenced production during the period. This demonstrates the Group’s immediate solution for customers who seek to diversify their procurement chain outside China. A few of the Group’s existing customers are in different stages of production transfer from the Group’s China site to the Vietnam site. 

Meanwhile, to mitigate the increasing risk of Sino-US trade tensions, some customers in the auto industry and Consumer Electronics segment continue their planned transfer of their production for the US end-market from China to North America and ASEAN. This switch-over to other suppliers in these regions is expected to complete in FY2021. We expect the negative impact of such a switch-over to be reflected in the financial year ending 31 March 2022 (“FY2022”).  

My thought 

Shares - 435,630,837

Cash - 1billion

NAV - HKD 2.29 / shares , SGD 0.40 

Net profit margin - 8.3%

Shortage of IC, will definitely impact the company. With EV booming, the future of this stock should be looking good. Compare to competitor V.S industry, this counter seem like abit lag behind.