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Valuetronics’ Q2 profit lower by 12.8%

Net profit for the firm fell to HK$44.32 million for the quarter, down from HK$50.82 million a year ago.

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Electronics manufacturing services company Valuetronics Holdings reported a 12.8% decline in net profit for its fiscal second quarter ended September 30.

Net profit for the firm fell to HK$44.32 million for the quarter, down from HK$50.82 million a year ago. The lower profit was due to slower sales and the forking out of HK$13.60 million for the flash flooding incident caused by Super Typhoon Manghut at its factory at Danshui Town in the city of Huizhou in late September of this year.

The disruption caused by the flash flooding incident has disrupted production, which also affected sales. The company is making an insurance claim for the damages from the flash flood, as it currently absorbs the liability costs.

Revenue for the quarter dropped 1.30% from a year ago to HK$716.25 million.

For the half year financial period, net profit was down by 5.60% and revenue dipped 0.10%. Earnings per share for the six months declined HK$0.22 from HK$0.24 a year ago. The group has declared an interim cash dividend of HK$0.05.

Regarding its business outlook, Valuetronics said because it is a manufacturer with global sales, it is operating in an uncertain macro-economic environment caused by geo-political and trade tensions. “The United States (US) - China trade tensions, if escalated, could potentially undermine the global economy and impact the supply chains of companies serving US market,” Valuetronics cautioned.

“Whilst there is no material immediate direct impact on Valuetronics at this juncture, indirect and consequential impact on the Group cannot be ruled out if trade tensions were to escalate,” the firm added.

To mitigate impact of tariffs on goods imported to US market, the group has been working with customers in evaluating various measures, including the option of product assembly outside of China, it said.

Valuetronics opened lower by 2.17% on Monday at 68 Singapore cents.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.