Valuetronics H1 profit drops 38.1% to HK$56.6m amid global electronic components shortage

VALUETRONICS BN2 : BN2 0%, an electronic manufacturing service provider, on Wednesday (Nov 10) posted a 38.1 per cent drop in net profit for the first half ended Sep 30.

Severe shortages of certain key electronic components have affected the group's ability to meet orders, leading to a decline in revenue and a corresponding decrease in profit, said Valuetronics chairman and managing director Ricky Tse Chong Hing in a press statement.

Net profit for the 6 months ended September 2021 stood at HK$56.6 million (S$9.8 million), compared with HK$91.5 million a year ago.

Earnings per share was HK$0.13, versus HK$0.21 previously.

Revenue was down 7.3 per cent to HK$1 billion, from HK$1.1 billion posted in the year-ago period. 

The consumer electronics segment fell 12.5 per cent year on year to HK$319.4 million, from HK$365.1 million, mainly due to the cancellation and deferral of customer orders as a result of the components shortage. 

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Meanwhile, the group's industrial and commercial electronics (ICE) segment dropped 4.8 per cent to HK$695.1 million, from HK$729.8 million in the year-ago period. It saw a "significant drop" in sales to an automotive consumer who switched their production from Valuetronics's factory to another vendor in North America. 

Revenue growth from a printer customer and sensing devices customer helped offset ICE customer orders affected by the components shortage, Valuetronics noted. 

The board has declared an interim dividend of HK$0.04 per share, to be paid on Dec 3 after books close on Nov 24.

Although Tse expects the global components shortage to affect the group in the near term, he noted that Valuetronics' expansion plan in Vietnam is on track. The Vietnam campus is scheduled to go into mass production by end-FY2022 after passing ISO customer audits.

"There have been positive responses from potential customers regarding our regional manufacturing footprint strategy, and we are cautiously optimistic about revenue contributions from these new opportunities in the financial year ending Mar 31, 2023," he said.

Potential customers include a hardware provider for retail chain stores, and a customer providing cooling solutions for high-performance computing environments.

"The group is in the midst of finalising business terms with these potential customers, and this is subject to the constraints in supply chain which may affect the production ramp-up," Valuetronics said. 

Shares of mainboard-listed Valuetronics were trading 3.4 per cent or S$0.02 lower at S$0.57 as at the midday break on Wednesday, after the release of the results.