VS Industry sees brighter outlook on improved profit

by AFIQ AZIZ / pic by vs-i.com

VS INDUSTRY Bhd expects the operating environment in the electronics industry to pick up in the months ahead after seeing its latest quarterly earnings improve.

The company’s net profit for its first quarter ended Oct 30, 2020 (1Q21), registered an increase of 38.7% year-on-year (YoY) to RM66.68 million attributed to a favourable product sales mix in Malaysia. Turnover for the quarter, however, fell 4.6% YoY to RM987.1 million against RM1.03 billion on lower revenue contribution from its China operations, its exchange filing to the local bourse yesterday stated.

The group expects continued containment measures adopted by various governments and the anticipated gradual rollout of vaccines from early 2021 to boost the industry’s recovery next year.

“Against this backdrop, global and local economies are expected to rebound and recover over the next 12 months, along with improved consumer sentiments,” the group said.

VS Industry said domestic sales accounted for 88.7% or RM873.4 million of its revenue, while its Indonesia and China operations contributed 7% and 4.3% respectively.

Moving forward, the group said it will continue to be kept busy fulfilling customers’ orders in the coming quarters, including several new product models that are in the pipeline for launching in 2021 by its customers. In August 2020, the group secured a new customer from the US to produce cordless electrostatic sprayers on a box-build assembly basis.

“This is followed by the clinching of another new name in October 2020 to manufacture home appliances. With this, the group’s existing capacity is expected to be filled up by 2021,” it said.

To cater for future expansion purposes, the group also acquired six pieces of land with industrial buildings in October, with a total land size of approximately 413,682 sq ft in [email protected] Airport City, Senai, Johor, for a total consideration of RM98.8 million. The company’s headquarters will also be moved to iPark once the new buildings are ready.

“On balance, the board is cognisant of the challenges ahead. However, with prudent planning and careful execution, backed by the encouraging order flow from customers, the board opines that the financial performance of the group for the remaining quarters will be satisfactory,” the group said.

VS Industry MD Datuk Gan Sem Yam said given the above factors, along with the two new customers the company secured in August and October 2020 each, the company expects its existing capacity to be filled up by 2021.

“Therefore, we have acquired land and buildings that will enhance our built-up area in Malaysia by 25%, increasing the total floor space to more than two million sq ft.

“This will enable us to cater to the orders from our existing and new customers,” he said.