The journey of VIZIONE since COVID-19 strikes had truly changed the whole landscape of the company. Not only did the company diversified their business, but there is also a huge change in their shareholding structure as well. This of course, comes with a major change in the company’s share price, too.

Seeing this as the profitable quarter for 2021 financial year, one might wonder – is the worst over for VIZIONE now? To answer this question, we might need to take a deeper look into their financials.

Revenue Contribution

Most investor would recognize VIZIONE as the construction cum property development player in the market, and it is not a wonder why both of these industries are badly hit recently. However, the company, did have a healthcare division that should attract investors’ attention.

In December last year, VIZIONE had ventured into the glove business via its wholly owned subsidiary VIP Index Sdn Bhd, to acquire 51% of SSN Medical Products Sdn Bhd’s (“SSN”) shares.  The founders of SSN, namely Ang Teck Leong, Lim Kiat Yee and Ravendran Uthrapathy had a vast experience in the glove industry, prior to the booming of ASPs.

Profitability

Interestingly, VIZIONE only paid 5 million to acquire the shares of SSN, but promised to continuously invest capital into the soon-to-be subsidiary. To date, VIZIONE had invested 6.47 million for 6 new glove production lines for SSN, and it seems like the investment wielded well in this quarter.

Apparently, SSN had a 5.17 million segmental profit in this quarter, but had a net profit of approximately 4.16 million. The contribution to NCI of 2.03 million is a very good validation that the glove business had turned VIZIONE around.

Previously SSN had also mentioned to provide a profit guarantee of 15 million for 2021 financial year, and in this case, I think they would have no problem achieving that figure.

Cash Performance

On the cash flow, however, the company registered a negative operating cash flow for 6 months ended 2021 financial year.

I think this is quite understandable given the harsh construction outlook of Malaysia for now. Also, VIZIONE had on February 2021 to undertake a private placement of up to 30% of existing shares. The private placement price is 16.5 cents and 23.0 cents by tranche basis.

The management had also announced a rights issue with warrants. The key person of the company also decided to undertake a portion of the rights issue.

For now, VIZIONE still have approximately 53.30 million cash and cash equivalent on hand, with 38.47 million of short-term debt. In this case, chances for VIZIONE to default in loan would be very, very low.

Investment Opportunities

Personally, I think they did not suffer any LAD from their clients thus far, and most likely, the worse performance is behind VIZIONE for now.

One should take note that some of the construction works of VIZIONE are still able to operate due to its nature. The management also said they secured up to 801 million in new orders which would contribute to them in the upcoming years.

Moving forward, as the 12 glove manufacturing lines continues to support VIZIONE, perhaps VIZIONE could show better profitability in the future. On the dilutive effect however, we are unable to access, yet due to the unknown demand for the rights shares.

The share price of VIZIONE had also bottomed, hence the risks-reward ratio is limited, at least, that is what I think.