KUALA LUMPUR (June 20): Hong Leong Investment Bank (HLIB) Research has upgraded VS Industry Bhd (KL:VS) to “hold” at RM1.15 with a higher target price (TP) of RM1.04 (from 71 sen) pegged to an unchanged 16x price-to-earnings ratio.

In a note on Thursday, the research house said VS Industry chalked in top line of RM3.1 billion, which brought 9MFY2024 sum to RM89.2 million (down 37% year-on-year).

“This is in line with ours but fell behind consensus expectations at 78% and 55% of full year forecasts, respectively.

“Quarter-on-quarter (q-o-q) sales showed a 13% improvement on the back of an increase in orders from key customers. Bottom line charted commendable performance at 17x q-o-q/ up 67% y-o-y on the back of the higher sales recorded,” it said.

“We gather that outlook is looking promising with a healthy pickup in sales orders from VSI’s key customers following improved consumer sentiment s and normalisation of customers’ inventory levels,” it said.

Additionally, HLIB said things are also looking up with launches of several new models by certain customers which will keep VS Industry occupied in the mid-term.

“We take this opportunity to roll forward our valuation year to FY25 (from CY24 previously).

“Despite the macro uncertainties we opine that things are gradually looking better for VSI with the recovery in orders from key customers.