Affin Hwang maintains ‘buy’ on VS Industry, TP at RM1.60

KUALA LUMPUR: Affin Hwang Capital research has maintained its buy rating and unchanged target price of RM1.60 on VS Industry Bhd as its first quarter earnings for the 2020 financial year came within expectations.

The research house said net profit rose 21% year-on-year (y-o-y) as a result of reduced losses in the group’s China operations following a restructuring and streamlining exercise of its operations.

The Chinese operations reported an 85% lower pre-tax loss of RM3mil as compared to the previous corresponding quarter.

The improved performance in the current quarter was also owing to a RM5.4mil loss on disposal on a Chinese subsidiary in the comparative quarter

Minus the one-off items, the group’s core net profit was 3% lower y-o-y due to lower contribution from its key customer in Malaysia.

Group revenue contracted 4% y-o-y due to the lower contribution from its China operations, which was impacted by weak consumer and business sentiment arising from the US-China trade tensions.

Meanwhile, its Indonesian operations turned around and recorded a RM1mil pre-tax profit in 1QFY20 as compared to a pre-tax loss of RM1mil in 1QFY19, owing to a better product mix.

Source: TheStar