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Valuetronics Q2 profit up 26.3% on absence of one-off provision for China plant
ELECTRONICS manufacturer Valuetronics Holdings reported a 26.3 per cent rise in net profit for its fiscal 2020 second quarter ended Sept 30 to HK$56 million (S$9.7 million) from HK$44.3 million a year ago.
Profits rose mainly due to the absence of a HK$13.6 million one-off provision related to flash flooding at the company's Danshui plant in China in Q2 FY2019.
Net profit also rose after selling and distribution expenses decreased by 33.9 per cent to HK$6.2 million from HK$9.3 million mainly due to a HK$2.7 million write back of provision for sales returns.
For the six months ended Sept 30, earnings per share was 24 HK cents versus 21.9 cents.
For the second quarter, revenue edged down 0.5 per cent to HK$712.8 million from HK$716.2 million. This follows a 10.4 per cent revenue increase in its consumer electronics segment, offset by a 8.2 per cent drop in its industrial and commercial electronics segment due to lower demand.
The mainboard-listed firm declared an interim dividend of six HK cents per share, payable on Dec 10, 2019, compared with five HK cents per share last year.
For the six months ended Sept 30, net profit rose 10.8 per cent to HK$104.1 million from HK$94 million for the year-ago period, while revenue dipped 3.7 per cent to HK$1.37 billion from HK$1.42 billion.
As at Sept 30, 2019, the group had net current assets of HK$917.8 million versus HK$850.5 million on March 31, 2019. It has zero debt, and cash and bank deposits of HK$1.03 billion.
Valuetronics said the US-China trade war has resulted in customers diversifying their procurement strategies outside of China as more products fell under the trade war's expanding tariff list, which has impacted the group's revenue.
Therefore, it had in early 2019 begun to expand its manufacturing footprint to Vietnam to provide customers with an alternate manufacturing platform outside China.
Its first leased Vietnam manufacturing facility began mass production in June 2019, with shipments being made from Vietnam to the US market.
It has also leased a Vietnam factory with an approximate 4,000 square metres of floor area to cater for additional customer demand.
Valuetronics shares closed up S$0.005 or 0.7 per cent to S$0.68 on Tuesday, before the release of its Q2 results on Wednesday morning.