KUALA LUMPUR (Aug 14): Integrated electronics manufacturing services provider VS Industry Bhd (KL:VS) said its Philippine unit has secured orders from a key customer to manufacture consumer electronics products on a box-build assembly basis, with an expected revenue contribution of RM1.5 billion over two years.

“The estimated capital expenditure for these orders is RM100 million, to be funded through internally-generated funds,” VS Industry said in a bourse filing on Wednesday.

It said the customer is an existing customer of the wholly-owned Philippine unit,  VS Industry Philippines Inc (VSIB), in Malaysia.

"However, the identity and further information on the customer shall remain private and confidential as VSIP has entered into a non-disclosure agreement with the customer," it added.

VS Industry said VSIB has also entered into a five-year agreement to lease a factory from Logis Artico Inc to fulfil the new orders, with an option to renew the agreement for a further five years.

The factory building has a built-up area of 52,782 square metres and is located at the ALogis Sto Tomas, Light Industry and Science Park III, in Batangas.

VS Industry managing director Datuk Gan Sem Yam said the group opted to rent the facility in the Philippines as part of its asset-light model which significantly lowers the group’s financial commitment.

“We are confident in our plans in the Philippines by leveraging on our strong technical expertise and lean balance sheet,” Gan said in a statement.

VS Industry said the new orders are expected to contribute positively towards the group’s earnings from the financial year ending July 31, 2025 (FY2025) onwards.

The group expects a revenue contribution of RM300 million from the business in FY2025 and RM1.2 billion in FY2026.

Prior to the announcement of the contract win, the share price of VS Industry had been on an upward trajectory. Since announcing its 3QFY2024 results on June 19, the stock has risen nine sen or 7.8% to RM1.24, giving the group a market capitalisation of RM4.87 billion.

Analysts were either neutral or bullish about the stock, with six out of 12 analysts issuing “buy” calls, and the other six giving “hold” ratings. The target price ranged from CGS International’s 82 sen to CLSA’s RM1.60, with an average of RM1.35.