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Greater Growth With Valuetronics’s Change In Direction
Tradeable, Tradeable Ideas | 19 September 2014
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By: Raymond Leung
Articles (142) Profile
  1. Valuetronics is in the process of changing its business model by growing its industrial and commercial electronics (ICE) segment which has a higher profit margin.
  2. VALUE reported a growth of 24 percent and 36 percent year-on-year (YoY) in revenue for FY14 and 1Q15 respectively in the ICE segment.
  3. However, VALUE faces strong headwinds from the slowdown in the Chinese economy and increased competition faced by its customers for the CE segment.

Analysts' Updates on Valuetronics

Valuetronics Holdings (VALUE) is a company offering original equipment manufacturing and original design services. It is involved in the telecommunications, industrial, commercial and consumer electronics industries.

VALUE is currently in the process of changing its business model by growing its industrial and commercial electronics (ICE) segment which has a higher profit margin.

This change is also meant to counter act against its declining consumer electronics (CE) segment and meet the increasing demand for its ICE segment.

VALUE reported a growth of 24 percent and 36 percent year-on-year (YoY) in revenue for FY14 and 1Q15 respectively in the ICE segment. The growth is driven by the increasing trend for outsourcing of the manufacturing process and supply chains in China, as well as orders from new customers.

However, VALUE faces strong headwinds from the slowdown in the Chinese economy and increased competition faced by its customers for the CE segment.

This may pull down the overall financial performance of the group if its ICE segment fails to live up to expectations and make up for the weaker performance from CE.

Analysts from DBS Vickers Research reiterated their “Buy” call with a potential upside of 60.5 percent. This is in view of the growth prospect in ICE segment despite the challenging CE segment.

Investors might want to keep in mind that VALUE does not have any debts and has an average dividend yield of 5.5 percent for the past three years.

VALUE is also committed to pay out 30 to 50 percent of its net profit and projects its dividend yield for FY15 to be at 6 percent.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Valuetronics Hldgs  0.690 +0.005 +0.73%   
Business: Provides integrated electronics manufacturing services. [FY18 Turnover] Industrial & commercial electronics (51%), consumer electronics (49%).

Insight: Aug-18, 1Q19 revenue edged up 1.2% to HK$704m attr... Read More


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