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VS Industry Bhd (6963.KL) listed in the Bursa Malaysia
Background of VS Industry Bhd (6963.KL)
VS Industry Bhd was founded in 1982 and listed on Main market in 1998. Today VS Industry Bhd is a leading integrated electronics manufacturing services (EMS) provider in the region, with proven capabilities to undertake the manufacturing needs of global brand names for office and household electrical and electronic products.
VS Industry Bhd is now ranked alongside top global EMS providers for 11 consecutive years from 2007 to 2017.
Together with its Hong Kong Exchange listed subsidiary V.S. International Group Ltd, VS Industry Bhd has advanced manufacturing facilities located in Malaysia, China, Indonesia and Vietnam, who collectively employ a workforce of more than 10,000 people. The group offers one stop manufacturing solutions to world-renowned customers from Europe, Japan and the USA.
Its extensive manufacturing services include plastic injection mould design and fabrication, a wide range of injection tonnage and finishing processes, large scale production of printed circuit boards, automated assembly and final processes of packaging and logistics.
VS Industry Bhd has entered into a three-year Master-Supply agreement with vacuum cleaner company Bissell to manufacture its products on 27 February 2019. Bissell Inc is a 140-year old company that supplies vacuums, sweepers, carpet cleaning machines, as well as pet grooming products. The group is confident that BISSELL has high potential to be a key customer in future.
For the fiscal year ended 31 July 2019, revenue, gross profit and PBT of VS Industry Bhd declined by 3.0%, 3.8% and 1.3% yoy to RM3,978.4 m, RM370.4 m and RM174.0 m respectively.
Malaysia segment posted 7.6% increase in revenue respectively due to higher sales orders from key customers. However, revenue for Indonesia segment declined by 19.2% yoy to RM245.6 m. China segment recorded a lower revenue of RM388.1 m (-43.8% yoy) mainly due to large pre-tax loss of RM83.0 m.
VS Industry Bhd is continuing to pursue opportunities arising from trade diversions out of China. With many multi-national company brand owners still actively looking to re-locate operations to the ASEAN region, the group stands ready to benefit given its readily-available capacity on-hand. Production for its most recently-secured customer Bissell has commenced, with delivery anticipated from October onwards, contributing meaningfully to 2Q20 numbers.
A Quick Fundamental View for VS Industry:
- PE = 15.00,
- ROE = 9.69%,
- DIY = 2.71%
- Mkt Cap: 2,363.7M (RM) in Large Cap, Industrial Products & Services, Main Market.
- Trading at Overpriced.
Recent Insider Report for V.S Industry Bhd (Bursa Malaysia)
In the Insider Report of V.S Industry, it’s interesting to note that the Beh and Gan family which are biggest beneficiaries of a better VS outlook, the largest shareholder (Insider report) other the financial institutions like EPF and KWAP is Public Mutual. In the Insider Report, Managing Director of VS, Datuk S.Y. Gan has the largest share @ 4.61%. I believe the business owner is very confident with their VS Industry outlook business despite in its recent AGM, announcing slowdown in production due to US-China Trade War. With Dyson being its no. 1 customer and expanding its base, the Gan & Beh family will do well in VS Outlook, evident by the recent buying of more VS Industry in Aug & Sep 2019 confirmed this insider event in the Insider Report.
I will also state that in the Insider Report of VS Industry, the buying in Aug & Sep 2019 coincided at RM1.125 at the trendline for the TradeVSA chart. I believe that VS Outlook should be rosy as this is the lowest point for V.S price chart and when the owners are buying and increasing its share, they must have confidence on their own management.
Known Major Shareholder(s) As at 31st Oct 2018
18.59 % Datuk Beh Kim Ling & Datin Gan Chu Cheng
5.99 % Datuk Gan Sem Yam & Datin Ling Sok Mooi
Profitability Analysis of VS Industry Outlook
The profitability VS outlook is average performance as it dipped by its respective 12-15% ROE. The positive profitability is the low debt to equity ratio which enhance its attractiveness to value investor. Its dividend yield @ 2.65% also make it very attractive for those seeking income return as well as price appreciation in tandem with growth of its no. 1 customer Dyson. I recently admit, I got hold of Dyson vacuum product – Dyson D10 “Fluffy” is certainly differentiate than other brands. If more people like me get Dyson product, I see VS outlook got lot of potential.
VS Industry’s Outlook (Trading) – Weekly & Daily Chart VSA (Volume Spread Analysis) Review
Based on TradeVSA weekly chart and its medium term VS outlook, we notice the distribution with Up-Thrust at the top of the chart. Price subsequently follow thru with high volume Sell-Off to change the trend to mark-down stage. The mark-down stage ended with another Sell-Off bar with climatic volume. Smart money decided to step-in to accumulate at panic selling by public.
On VS outlook, medium trend change again to mark-up stage with Spring and Line Change bars at the weekly support. Currently we do spot another Up-Thrust bar near resistance last week. We expect price to pullback lower to support. Monitor if there any Spring bar for potential entry using weekly chart.
Red Bearish Pentagon appeared on 1 October 2019 and this indicate that another pullback is coming soon. The daily volume on the downbar is average and likely to re-test the support level again. Notice the previous support level are well supported with strength. We will look for potential opportunities if there a confirm strength with bullish signal at support.
Some of the funds are actively accumulate in this mark-up stage. Watch out for No Supply, Spring and Test bars for a better VS outlook.
*Pentagon Guider System has Buy or Sell Indicator indicated by Green Pentagon Icon and Red Pentagon Guider Icon in the field of Volume Spread Analysis. However, we advised reader that not all pentagons are buy or sell taken literally 100% of the time in Volume Spread Analysis method.
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