V.S. Industry Bhd ('VS') is integrated electronic manufacturing solutions provider for Original Equipment Manufacturer ('OEM') of office & household electrical & electronic products. The VS group, which includes an associate that is listed on the Main Board of the Hong Kong Stock Exchange, has manufacturing facilities in Malaysia, China & Indonesia that employ a workforce of 15,000.
Recent Financial results
VS has just reported its quarterly result for QE31/1/2007. For that quarter, its net profit increased 3.0% q-o-q or 204% y-o-y to RM16.6 million while its turnover increased by 8.7% q-o-q or 63.3% y-o-y to RM265 million. When we compared the last 4 quarters with the preceding 4 quarters, we can see that its net profit has increased by 138% from RM20.1 million to RM47.7 million while its turnover has increased by 35.6% from RM641 million to RM870 million.
If VS can maintain its 1H2007 performance for the rest of FY2007, VS may be able to report a net profit of RM65 million on a turnover of RM1.0 billion. Its EPS may hit a high of 47.5 sen.
Valuation
Based on the foregoing projected performance & today (March 30)'s closing price of RM2.32, VS is trading at a PE of 4.9 times. I believe that this PE multiple is low & VS could trade up to a PE multiple of 10 times or more.
Technical Outlook
VS is in a long-term uptrend since September 2005. The share price has however entered in a sharper uptrend since September last year. This latter uptrend (which is classified as a medium-term uptrend) will provide support for this stock at RM1.90. Its recent high was about RM2.33 at the end of January this year.
Chart: VS' daily chart as at March 30
Conclusion
Based on attractive valuation & bullish technical outlook, VS is a good stock for medium-term investment.
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