KUALA LUMPUR (Sept 24): VS Industry Bhd (KL:VS) said its fourth quarter net profit surged 107% from the year before, due to a one-off gain of RM46.7 million arising from the partial disposal of its equity interest in a subsidiary and increased orders and a better product mix that helped improve utilisation rate.
Net profit for the three months ended July 31, 2024 (4QFY2024), rose to RM126.66 million from RM60.96 million in 4QFY2023, as revenue rose 5.6% to RM1.21 billion from RM1.15 million. Earnings per share rose to 3.28 sen from 1.58 sen, its bourse filing showed.
VS Industry, which manufactures plastic molded and electronic parts and components for speakers and remote controls units, said it has partially sold its equity interest in Hong Kong-listed VS International Group Ltd (VSIG), trimming its stake from 43.34% to 33.66%.
Its retained ownership interest in VSIG has been accounted for as investment in an associate, while contribution from VSIG for the quarter under review has been classified under discontinued operations following the dilution of the group's interest. "This was due to the issuance of new shares by VSIG in relation to the acquisition of additional equity interest in VS Industry Vietnam Joint Stock Company (VSVN) coupled with partial disposal of equity interest in VSIG,” it said.
Adjusting for the one-off non-cash item, the group's 4QFY2024 net profit would be RM80 million, up 31% from RM61 million a year ago.
VS also incurred a foreign exchange loss of RM3.9 million in 4QFY2024, versus a forex gain of RM19.8 million in 4QFY2023.
The group declared a fourth interim dividend of 0.6 sen per share to be paid on Oct 26. It also proposed a final dividend of 0.6 sen per share to be paid on a date to be fixed once shareholders approve it. If approved, its full FY2024 dividend payout will come to 2.2 sen per share — same as FY2023. The group has a policy of paying out 40% of its net profit as dividend.
The group is expecting its positive earnings growth momentum to continue into FY2025 as sales orders from its key customers continue to pick up in tandem with improved consumer sentiments and new model launches, managing director Datuk SY Gan said in a statement.
The group’s newly incorporated Philippines subsidiary has secured new orders with an aggregate value of about RM1.5 billion for the next two years, of which 300 million is expected to be realised in FY2025 and RM1.2 billion in FY2026, Gan said, based on anticipated sales volume and pricing.
“With a budgeted capex of RM100 million, we adopted an asset-light strategy by renting a factory in the country. We have deployed a dedicated team there to oversee the setup and ensure smooth operations, with production targeted to commence by the first quarter of 2025,” he said.
“Back home in Malaysia, discussions with prospective customers are ongoing, and we remain optimistic about securing a new client by the end of 2024. This would further diversify our customer base.
"On balance, we are broadly upbeat on our outlook underpinned by the aforementioned factors. Moderating factors, however, would be the macroeconomic uncertainties as well as forex impact arising from strengthening Ringgit,” Gan added.
For its full FY2024 ended July 31, VS Industry’s net profit increased 37.6% to RM246.07 million from RM178.79 million in FY2023, though revenue slipped 6.7% to RM4.25 billion from RM4.56 billion on lower orders from a key customer that was partially offset by higher turnover from Singapore and Indonesia. The increase in earnings was supported by a better product sales mix and an improved utilisation rate in the second half of the year.
VS Industry's shares closed three sen or 2.6% lower at RM1.11 on Tuesday, giving the group a market capitalisation of RM4.37 billion. Year-to-date, the counter has gained 36.2%.