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Hot stock: Medical-device maker Vicplas falls 30% after board trims dividend

SHARES of Vicplas International, which makes medical devices and pipes, tumbled on Monday morning despite the mainboard-listed firm announcing that its bottom line had improved for the financial year ended July 31.

The counter lost as much as 30 per cent or 13.5 Singapore cents to trade at 31.5 cents within the first minute of trading.

It regained some momentum later in the morning, trading at 36.5 cents as at 9.46am, down 18.9 per cent or 8.5 cents from Friday's close.

About 26.1 million shares had changed hands by then, the highest volume clocked on the Singapore bourse in the morning, making Vicplas the fourth most actively traded by value.

After the opening bell, four large trades - each with a value of more than S$150,000 - were done as at 9.41am, according to Shareinvestor data.

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In results released on Monday before market open, Vicplas directors proposed a final dividend of 0.375 Singapore cent per share for FY20.

This is half of what was paid out in FY19, when the board had declared a final dividend of 0.5 cent per share plus a special dividend of 0.25 cent per share.

The group on Monday noted that although its profit after tax for FY20 improved year on year, that was thanks to non-recurring negative goodwill (which is a non-cash accounting item) as well as Covid-19 related subsidies from governments to mitigate the coronavirus pandemic's impact. Such subsidies are likely to be of a lower quantum in FY21, Vicplas said.

It added that it needs to strike a balance between rewarding shareholders and maintaining sufficient capital to continually develop the business.

This takes into account the challenging operating environment and outlook for FY21, the group's working capital and cash flow requirements, and the need to preserve financial capacity to prepare for expected capital expenditure relating to the establishment or acquisition of a fifth plant for the medical devices segment, Vicplas said.

The company on Monday noted that it may set up or acquire a fifth plant outside China for manufacturing medical devices to diversify and attract potential customers, although these plans are at an early stage.

If approved by shareholders at the Nov 26, 2020 annual general meeting, the final dividend of 0.375 cent per share for FY20 will be paid on Jan 15, 2021, after books closure on Jan 6, 2021.

Net profit for Vicplas increased by 17.7 per cent to nearly S$5 million for the year while revenue rose 10.8 per cent to S$88.8 million.

The overall top-line growth was driven by an increase in revenue from the medical devices segment, but was partially offset by lower contribution from the pipes and pipe fittings segment.

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