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We came away from a recent session with management a lot more positive on its growth prospects, anticipated be much better-than-expected. Estimated orders from its most recently-clinched customer, Victory Innovations Company Inc (Victory Inc), appear to be more robust than previously thought. Just as encouragingly, its existing key customers are also seeing brisk sales, translating to stronger order flows for VS Industry (VSI). Management also sees improvements in its operating margins as almost all lines will be running at full capacity, now underpinned by 5 key customers with global interests. The sum total of all these developments are a further lifting of our FY21/FY22 estimates by an average 26%, while target price is also raised to RM1.96 (RM1.57 previously) based on a 17x earnings multiple ( 1SD to its long-term average) to its CY21 EPS. Our call is upgraded to Trading Buy, with further trading interest likely to be seen as the Group remains in discussion with a few other potential customers.

Customer X has been a customer since 2001 and continues to keep VSI busy via 1) box-build assemblies, and 2) printed circuit board (PCB) and box-build assemblies. Currently involved in both personal care and floor care products, the latter will eventually be phased out though to be supplanted by more orders of the former.A coffee brewer customer has been on the books since 2012, with VSI serving as its Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM), and an important strategic partner in the ASEAN region.A pool cleaning customer has been an OEM and ODM customer since 2013 meanwhile, with VSI its only manufacturer of robotic pool cleaners in the world.A US-based customer signed up in March 2019. Involved in the floor care business, VSI is its first supplier in the ASEAN region. Order flow from the customer has been more robust than initially anticipated.Victory Inc. is the Group’s the most recent customer, with positive financial contributions anticipated as early as 2HFY21 given the backlog of orders amid ‘extreme’ demand for its products. VSI will be its first supplier outside of China.Other developments. With all of its manufacturing facilities expected to be fully utilized by this financial year, management is already on the lookout for further space (~400,000 square feet), with ~RM100m set aside for this purpose. Workers are not expected to be an issue despite the planned expansions and the government’s restrictions, with the Group having sufficient numbers while also having adopted greater levels of automation.

Source: PublicInvest Research - 21 Aug 2020

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Stock: [VS]: V.S INDUSTRY BHD

2020-08-21 13:53 | Report Abuse

analyst start reporting good news. not the time to sell.

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Stock: [VS]: V.S INDUSTRY BHD

2020-08-20 16:48 | Report Abuse

everyday new high. Buy and keep. tp 3.00
more business coming in as more business moving out from china and landed in VS.

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Stock: [LUXCHEM]: LUXCHEM CORPORATION BHD

2020-08-19 16:57 | Report Abuse

this one can hold long-term
many glove factory set-up and glove demand high,,,,, sure more business for luxchem