Valuetronics Holdings Limited’s (VHL) FY13 results were within our expectations. Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just 0.6% shy of our forecast. Net profit from continuing operations fell 26.1% to HK$118.4m, while net losses from its now discontinued Licensing division widened by 32.7% to HK$39.8m, resulting in overall PATMI decline of 39.6% to HK$78.7m. Excluding exceptional items, we estimate that core PATMI for FY13 fell 14.7% to HK$103.7m (1.1% above our estimate). VHL also slashed its FY13 DPS from HK$0.17 to HK$0.08. This was below our HK$0.11/share forecast but still translates into a decent yield of ~6.0%. We foresee an improvement in VHL’s bottomline and DPS in FY14 as it does not expect to incur any further expenses for its Licensing business. We maintain our HOLD rating but raise our fair value estimate slightly from S$0.19 to S$0.195 due to a marginal 2.7% increase in our FY14 core PATMI forecast.
FY13 results in-line with our expectations
Valuetronics Holdings Limited (VHL) reported FY13 results which were within our expectations. Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just 0.6% shy of our forecast. The decline was attributed to a 6.1% fall in sales from its Consumer Electronics segment, but partially offset by a 4.0% rise in revenue from its Industrial and Commercial Electronics (ICE) customers. Net profit from continuing operations fell 26.1% to HK$118.4m, while net losses from its now discontinued Licensing division widened by 32.7% to HK$39.8m, resulting in overall PATMI decline of 39.6% to HK$78.7m. Excluding the one-off termination expenditure and impairment of PPE from its Licensing division and other exceptional items, we estimate that core PATMI for FY13 fell 14.7% to HK$103.7m. This was 1.1% above our estimate.
Dividends cut but still translates into a yield of ~6.0%
Given the sharp decline in VHL’s reported PATMI, its DPS for FY13 was consequently slashed from HK$0.17/share (this includes a HK$0.01 special dividend) to HK$0.08/share. This represents a payout ratio of ~36.5% and was below our HK$0.11 DPS forecast. However, this still translates into a decent yield of ~6.0%.
No further losses from Licensing business; maintain HOLD
Following management’s decision to cease its Licensing division, VHL does not expect any further expenses to be incurred for this business in FY14. Hence we foresee an improvement in its bottomline in FY14 due to the hefty losses incurred in FY13. This would likely result in an improvement in its FY14 DPS (OIR forecast: HK$0.11/share). We lower our FY14 revenue forecast by 3.6% but raise our core PATMI estimate by 2.7% as we expect VHL to place stronger focus on its higher margin ICE business. Our FY15 projections are also introduced. We derive a slightly higher fair value estimate of S$0.195 (previously S$0.19), still pegged to 4x FY14F EPS. Although VHL trades at 4.3x and 0.73x FY14F PER and PBR, respectively, we maintain our HOLD rating on the stock given the still challenging outlook and lack of near-term catalysts.
Valuetronics Holdings Limited (VHL) reported FY13 results which were within our expectations. Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just 0.6% shy of our forecast. The decline was attributed to a 6.1% fall in sales from its Consumer Electronics segment, but partially offset by a 4.0% rise in revenue from its Industrial and Commercial Electronics (ICE) customers. Net profit from continuing operations fell 26.1% to HK$118.4m, while net losses from its now discontinued Licensing division widened by 32.7% to HK$39.8m, resulting in overall PATMI decline of 39.6% to HK$78.7m. Excluding the one-off termination expenditure and impairment of PPE from its Licensing division and other exceptional items, we estimate that core PATMI for FY13 fell 14.7% to HK$103.7m. This was 1.1% above our estimate.
Dividends cut but still translates into a yield of ~6.0%
Given the sharp decline in VHL’s reported PATMI, its DPS for FY13 was consequently slashed from HK$0.17/share (this includes a HK$0.01 special dividend) to HK$0.08/share. This represents a payout ratio of ~36.5% and was below our HK$0.11 DPS forecast. However, this still translates into a decent yield of ~6.0%.
No further losses from Licensing business; maintain HOLD
Following management’s decision to cease its Licensing division, VHL does not expect any further expenses to be incurred for this business in FY14. Hence we foresee an improvement in its bottomline in FY14 due to the hefty losses incurred in FY13. This would likely result in an improvement in its FY14 DPS (OIR forecast: HK$0.11/share). We lower our FY14 revenue forecast by 3.6% but raise our core PATMI estimate by 2.7% as we expect VHL to place stronger focus on its higher margin ICE business. Our FY15 projections are also introduced. We derive a slightly higher fair value estimate of S$0.195 (previously S$0.19), still pegged to 4x FY14F EPS. Although VHL trades at 4.3x and 0.73x FY14F PER and PBR, respectively, we maintain our HOLD rating on the stock given the still challenging outlook and lack of near-term catalysts.
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