Valuetronics share price gain 2.48% as it unveils Vietnam plans to avoid US-China tensions in FY2019 results

Electronics manufacturing services firm Valuetronics’ share price gained 2.48% after it announced plans to move part of its production out of China amid the United States (US)-Sino trade tensions, into Vietnam in its full-year financial earnings announcement on Tuesday.

The group posted an earnings per share of 46.2 Hong Kong cents for the financial year, which is lower compared to the 48.1 Hong Kong cents in the preceding year.

Net profit for the year ended March 31 fell by 2.6% to 199.5 million Hong Kong dollars, compared with 204.7 million Hong Kong dollars a year ago.

Valuetronics share price

Valuetronics’ shares rose S$0.015 or 2.48%, to S$0.62 at around 4pm Singapore time.

Year-to-date the Singapore Exchange mainboard-listed firm’s shares have remained flattish, up by 0.06%, from the trading price of S$0.66 on January 2, 2019.

Valuetronics earnings result highlights

The group has proposed a final dividend of 15 Hong Kong cents per share and a special dividend of five Hong Kong cents per share for the financial year of 2019, subject to approval from shareholders.

Including the interim dividend of five Hong Kong cents per share paid last December, the aggregate dividend for the year stands at 25 Hong Kong cents per share.

Revenue for the year ended March 31 eased 0.9% year-on-year to 2.83 billion Hong Kong dollars, from 2.85 billion Hong Kong dollars a year ago.

A slowdown in orders for smart LED lighting products led to a 16.9% decline in the group’s consumer electronics segment, to 1.2 billion Hong Kong dollars. But the decline in sales in that segment was offset by a 14.6% growth in its industrial and commercial electronics segment, to 1.67 billion Hong Kong dollars.

Valuetronics sets its sights on Vietnam as it avoids US-China tensions

In the earnings announcement, the firm singled out Vietnam as a location it will expand its production in, outside of China, adding that it has been working closely with one of its customers to explore manufacturing solutions in that country.

The group said it may expand its production capacity in Vietnam by building its own manufacturing facilities, depending on how the US-China trade tensions pan out.

The firm added that it will continue to expand its presence in North America through merger and acquisitions.

Vietnam has been benefitting from the trade tensions between the world’s two largest economies. Many manufacturers in China are shifting their production to Southeast Asia, as they fear of the impact of higher levies on Chinese-manufactured goods on sales to the US market.

In a report issued by Singapore’s DBS bank on Tuesday, the bank’s senior economist Irvin Seah cited the trade war between the US and China as a factor that will propel Vietnam’s robust economic growth in the coming years.

Mr Seah added that the Vietnam economy will be bigger than Singapore’s economy in 10 years, if growth conditions, such as the spill-over effects from the US-China trade war, strong investment growth, and economic policies focused on long-term economic stability ensue in the country.