What’s New

• Bagged cordless electrostatic sprayer order. V.S. Industry (VS) has signed a supply agreement with a new customer, Victory Inc to manufacture and supply cordless electrostatic sprayers on box-built basis. Victory Inc. is a leading innovative sanitary solutions provider specializing in chemical application equipment, serving professionals who are responsible for maintaining healthy spaces with a focus on sanitization, decontamination, pest control, odor control and infection prevention. Due to strong demand on Victory Inc’s products caused by the pandemic, the Group aims to start production ASAP with ready space and facility. VS targets to commence mass production by 1QCY21 and expects the order to contribute positively in 2HFY21F onwards.

• Growth remains intact despite facing short-term headwinds. Whilst we are positive on VS’ long-term prospects with its proven track record and leading position in the EMS market, we believe the Group’s imminent outlook remains challenging given tepid demand on consumer E&E products (except ICT products) as affected by the pandemic. Furthermore, we reckon that recent share price rally has factored in the potential new orders arising from the US China trade war.

• Ceasing coverage. We are ceasing coverage on VS due to internal resource reallocation. As such, we are reclassifying our recommendation on the stock to NOT RATED from HOLD.

• Investors should not rely on our earnings forecast and recommendation in making investment decisions. Our previous target price for the stock was RM0.92, based on 14x FY21F PE.

Source: JF Apex Securities Research - 21 Aug 2020