HLIB Research said VS expects to secure new orders with an expected aggregate value of RM1.5bil over the next two years through its newly incorporated subsidiary in the Philippines.
PETALING JAYA: VS Industry Bhd
is likely to only see temporary effects from the strengthening of the ringgit.
The electronics manufacturing services company will take this new development into account and is seen to revise the terms with key customers to factor in the new foreign exchange rates.
“The drastic appreciation in the ringgit could have a negative but temporary bearing on the company’s near-term earnings,” RHB Research said in its report.
Despite the recent movements in the ringgit, RHB Research said the company is anticipated to record a financial year 2025 (FY25) earnings growth of 37%.
This is expected to be driven by the normalisation of a major customer’s orders, the contribution of a new customer with approximately RM300mil of new orders expected and also a turnaround of its China subsidiary post-restructuring.
Also, the company’s establishment of its Philippines operations should commence early next year although the research house only expects positive earnings contribution from this area in FY26.
“The explosive three-year earnings compounded annual growth rate of 30% will be anchored by the expansion into the Philippines for significant market share gain, whilst the development of new capabilities will broaden the supply chain network to enhance the company’s profitability.
“In addition, the company is well-positioned to capitalise on the opportunities arising from the trade war diversion,” it said.
Meanwhile, Hong Leong Investment Bank (HLIB) Research said VS expects to secure new orders with an expected aggregate value of RM1.5bil over the next two years through its newly incorporated subsidiary in the Philippines.
“The company also remains optimistic about securing a new client by the end of 2024, which would further diversify its customer base and provide additional growth opportunities,” it said.
HLIB Research maintained its “buy” call on VS with an unchanged target price of RM1.42 and 18 times 2025’s earnings per share.
It noted that VS has a diverse customer base and strategic capacity expansion, which will sustain its revenue growth and profitability.
