Brokers' take

Valuetronics Holdings | Add Target price: S$0.95 May 30 close: S$0.775 CGS-CIMB Research, May 28

Valuetronics reported FY3/18 core net profit of HK$201 million (+33 per cent year-on-year), on the back of higher sales from consumer electronics (CE) and industrial & commercial electronics (ICE). This formed 97-99 per cent of Bloomberg's consensus forecasts. 4QFY18 core net profit only grew 7.1 per cent y-o-y. Apart from seasonality weakness (timing of Chinese New Year affected labour issues), inventory reduction of smart lighting products and shortage of critical components also contributed to slower CE and ICE sales, respectively.

Consumer lifestyle products, particularly electric toothbrushes, were one of its key outperformers in FY18, posting double-digit growth. We expect increasing product penetration and market depth to underpin such sales momentum into FY19F, thereby offsetting possible revenue decline from wireless lighting, which could undergo some destocking over 1-2 quarters.