VS Industry ' Stronger sales in the 2H

Stock Name: VS
Company Name: V.S INDUSTRY BHD

Research House: RHB

Price Call: BUY

Target Price: 2.10

VS Industry ' Stronger sales in the 2H                                                       Outperform (Upgraded)

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-          VSI expects stronger orders from Dyson in 2H on the back 3 new model launches, potentially increasing by 15-20% yoy in the 2H. Dyson accounts for around 70% of revenue.

-          We have raised our target PER to 8x from 6x to reflect the stronger earnings growth expected and an improved outlook ahead. Coupled with our earnings adjustment, our fair value estimate is raised to RM2.10/share. We upgrade our recommendation to Outperform (from underperform).

Source: RHB Reserach - 4 April 2012

RHB Research maintains underperform on VS Industry

Stock Name: VS
Company Name: V.S INDUSTRY BHD

Research House: RHB

Price Call: SELL

Target Price: 1.40

KUALA LUMPUR (Jan 3): RHB Research Institute is maintaining its Underweight on VS Industry and its fair value estimate of RM1.40 a share based on 6.0 times CY12 remains unchanged.

It said on Tuesday the 1QFY07/12 core net profit of RM9.6 million was within expectations. The 1Q revenue increased by 7.5% on-quarter on orders from new volume sales for Itron and Epson.

However, the first quarter earnings before interest and taxation (EBIT), more than doubled on-quarter as EBIT margin expanded by 2.8 percentage points from operating leverage effects on higher utilisation rates.

'Coupled with lower share of associate losses, core net profit grew 29.1% on-quarter. Separately, VSI declared an interim single-tier DPS of 5.0 sen,' it said.

RHB Research said it believes the near-term outlook remains challenging stemming from weaker consumer spending amidst the macroeconomic headwinds.

'However, we believe the new contribution of Keurig (coffee brewers) should partly mitigate weaker sales from existing customers (i.e. NextWindow and Dyson). Furthermore, in the longer term, we believe VSI could benefit from rising demand for outsourcing manufacturing capabilities,' it said.