VS maintained its net profit track record

VS has just announced its results for 2Q2008 (which ended 31/1/2008). Its net profit increased by 0.6% q-o-q or 27.8% y-o-y to RM21.2 million. Turnover has also increased by 14.7% q-o-q or 25.6% y-o-y to RM333 million.



VS (closed at RM2.84 yesterday) is now trading at a trailing PE of 5.0 times (based on last 4 quarters' EPS of 57 sen) or at a P/Book of 1.3 times (based on its NTA per share of RM2.22 as at 31/1/2008). At these multiples, VS is deemed inexpensive.

In December last year, I have recommended taking profit on this stock at the then-prevailing price of around RM3.90. Since then, the share price has eased off a bit. From the chart below, the share price's uptrend had accelerated twice from A-A to A1-A1, then to A2-A2. The A2-A2 uptrend line was violated in January this year. The stock appears to have found some support at the A1-A1 uptrend line. Horizontal supports can be seen at RM2.50 & RM2.30, while overhead horizontal resistance levels are at RM2.80 & RM3.10.


Chart: VS' weekly chart as at March 26, 2008 (courtesy of Quickcharts)

Based on attractive valuation & tentative improvement in technical outlook, VS could be a BUY for the medium-term.

While most investors know VS as a manufacturer & assembler of electronic and electrical products and plastic moulded components and parts, not many are aware that it has an associate, VS Mining which is involved in the supply of coal to Tenaga's Manjung plant as well as to Indonesia Power. In addition, VS Mining has a subsidiary, PT Berkat Banua, which has 5 licences for coal extraction in a 902-hectare area in Kalimantan, Indonesia (with estimated reserves of 50 million tonnes). It will be interesting to see how the recent increases in coal prices will benefit VS. You can read more about VS' coal business in this report from the EdgeDaily.