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Valuetronics Q1 profit up 1.9% on higher industrial, commercial electronics revenue

VALUETRONICS, the electronics manufacturing services (EMS) firm, has posted a net profit of HK$49.7 million (S$8.7 million) for the first quarter, up 1.9 per cent from the same period a year earlier as more industrial and commercial electronics business helped it overcome the slide in demand for smart lighting.

Revenue for the three months ended June 30 rose 1.2 per cent to HK$704 million.

Industrial and commercial electronics revenue rose 15.2 per cent to HK$436.8 million on the back of strong performance in connectivity modules used in the automotive industry, the group said on Tuesday.

Consumer electronics revenue fell 15.6 per cent to HK$267.2 million, owing to slower demand from Philips Lighting in the smart lighting business, though this was partially offset by higher sales of consumer lifestyle products.

Valuetronics said: "Our smart lighting customer indicated in their most recent financial results released in end-July 2018 that their sales between April and June 2018 were weak due to their trade partners winding down inventories to more normalised levels. Our customer indicated that they expect to sell more in the remaining of the year, thus we expect to ride on this recovery trend."

Meanwhile, Valuetronics said it believes the growth momentum in its consumer lifestyle products segment can be sustained by its customer’s new series of innovative products.

First-quarter gross profit margin was 14.6 per cent, down from 15 per cent for the same period a year earlier on a shift in product mix.

Net cash from operations rose to HK$88.5 million, lifting total cash and bank deposits to HK$757.2 million as at June 30, up from HK$671.1 million as at March 2018. Valuetronics had zero debt. 

Earnings per share was 11.6 HK cents, unchanged from the same period last year. Net asset value per share was HK$2.60 as at June 30, from HK$2.50 as at March 31.

The group said: "Automotive products are expected to remain as the primary driver for the industrial and commercial electronics segment’s growth with increasing demand for in-car connectivity."

However, Valuetronics also noted that it operates "in an uncertain macroeconomic environment, caused by geopolitical and trade tensions and also supply chain challenges such as rising raw material prices and longer procurement lead times".