Vicom’s H2 net profit climbs 4.5% to S$13.7 million on higher revenue

VEHICLE inspection company Vicom reported on Wednesday (Feb 21) a 4.5 per cent increase in net profit for the second half of 2023, on the back of higher revenue.

Net profit for the six months ended Dec 31, 2023, rose to S$13.7 million from S$13.1 million in the corresponding year-ago period.

A final dividend of S$0.0275 per share was proposed, down from the S$0.0332 final dividend in the preceding financial year. Including the interim dividend of S$0.0275 per share, the total dividend for FY2023 amounted to S$0.055 per share, down from S$0.0664 in FY2022.

The lower dividend represents a payout ratio of 70 per cent.

“In view of the capital expenditure required for the group’s expansion plans, which include a major investment in a new testing and inspection centre at Jalan Papan, the directors have approved a revision of the dividend payout ratio from 90 per cent to 70 per cent of net profit attributable to shareholders from (H1 FY2023),” the company said.

Revenue for the second half grew 1.9 per cent on-year to S$56 million.

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For the full year, Vicom’s revenue rose 3.3 per cent to S$111.9 million, while net profit climbed 5.4 per cent to S$27.6 million.

“Our vehicle-testing business remained resilient and we performed a total of 520,895 vehicle inspections, maintaining our market share of 72 per cent,” Vicom said.

The company expects demand for vehicle testing and related work to be “strong” as it has been appointed by the Land Transport Authority as an authorised partner for On-Board Unit installations, part of the Electronic Road Pricing 2.0 exercise.

Demand for non-vehicle testing is also expected to increase with the anticipated recovery of the manufacturing sector and possible improvement in the overall economy.

But Vicom warned that profit margins will continue to be under pressure due to inflation and greater competition.

“Barring unforeseen circumstances arising from global geopolitical tensions or headwinds, the group expects satisfactory performance in the year ahead,” it said.

Net asset value per ordinary share for the group rose to S$0.3692 as at December 2023, from S$0.3503 a year earlier.

Vicom shares rose 1.4 per cent to close at S$1.45 on Wednesday, before the announcement.