Stocks to Watch Ariantec, V S Industry, Grand-Flo, United Plantations, APM

KUALA LUMPUR (April 17): External factors may continue to have an upper hand in dictating the direction of Malaysian stocks on Wednesday. For now, dynamics of the European sovereign debt market will be closely watched, on concerns that Spain's rising bond yields could threaten the stability of the region's economy.

That, together with the landscape in the US and China, could have an impact on Asian financial markets, as investors evaluate the effects of these major global importers on emerging exporting nations like Malaysia.

The FBM KLCI of 30 stocks fell 1.32 points to close at 1,596.19 on Tuesday.

Stocks to watch Wednesday include Ariantec Global Bhd, V.S INDUSTRY BHD [], GRAND-FLO SOLUTION BHD [], United PLANTATION []s Bhd, and APM AUTOMOTIVE HOLDINGS BHD [].

Bursa Malaysia has queried information TECHNOLOGY [] firm Ariantec on the unusual trading patterns of the stock. It was the most actively traded stocks in the morning session on Tuesday.

V S Industry shares go ex-dividend on Wednesday. The electronic products contract manufacturer plans to pay a second interim single-tier dividend of two sen a share for financial year ending July 31, 2012.

Grand-Flo, an enterprise data collection and collation system solutions provider, plans to reward shareholders with a final dividend of 1.2 sen a share for financial year ended Dec 31, 2011. The firm said that the dividend proposed is in line with its dividend policy, which aims to distribute to its shareholders a minimum of 20% of the group's net profits for each financial year.

United Plantations plans to reward shareholders with a special and final dividend with a combined value of 60 sen a share for financial year ended December 31, 2011. United Plantations said the special portion comprises a 50% gross payment of the stock's par value of RM1 less 25% tax. This translates into 37.5 sen a share. The final dividend of 30% less tax, translates into 22.5 sen.

APM has established a wholly-owned subsidiary, PT APM Auto Components Indonesia, to undertake production and sale of automotive heat exchange products on an industrial lot at Suryacipta Industrial City in Karawang, West Java. It said the Indonesian authorities had approved the deed of establishment of the subsidiary, and that completion of the facility was expected by the end of 2012. Operations would commence in the second quarter of 2013.



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V.S. Industry moves 8 spots up to 32 among top 50 global EMS players

KUALA LUMPUR (April 16): Electronics manufacturing services (EMS) provider V.S. Industry Bhd has moved up eight notches to Number 32 among the world’s top 50 EMS, based on revenue size, in an annual survey compiled by Manufacturing Market Insider (MMI), an EMS-industry newsletter.

In a statement Monday, V.S. Industry said the move up the ranking was a result of its 28.3% growth in group revenue to RM1,023 billion for the financial year ended July 31, 2011 (FY2011), from RM800.2 million a year earlier.

VS Industry is one of two Malaysian companies that made it to the list; the other is SMT Technologies Sdn Bhd, which ranked Number 41.

V.S. Industry managing director Gan Sem Yam said the achievement pointed as much to the Group’s resilience in the highly-competitive EMS industry for the last 3 decades as it does to the growth potential of VSI.

“Indeed, the higher ranking would not have been possible without the Group’s commitment to continuously extend our EMS services to fulfil our clients’ manufacturing needs while they focus on product and market development.

“It is VSI’s intention to focus on enhancing our core EMS business going forward, to position ourselves to capture a larger portion of the global market,” he said.

VS Industry provides extensive manufacturing services, which include plastic injection mould design and fabrication, wide tonnage range of plastic injection, finishing processes, large scale production of printed circuit board assembly, automated assembly, and final processes of packaging and logistics.

Currently, VS Industry has production facilities in Malaysia, Indonesia, China and Vietnam, and serves more than 50 clients from Europe, Japan and USA.

The company focuses on manufacturing high-value consumer electronics and office automation products of renowned global brands; some of VSI’s products include high-end vacuum cleaners, single-cup coffee machines, touch screens equipment, automobile climate controller, digital power meters, and landscaping equipment.

Gan said while we are pleased with its market position, it was not going to rest on its laurels.

“We intend to continue with our expansion plans, not only in terms of additional investment for production facilities but also in the development of new customers and markets.

“This, we hope, would translate to a larger revenue base for the Group and elevate us to the next significant level,” he said.



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Stocks to watch: UM Land, VS Industry, BCorp, SelProp

KUALA LUMPUR (March 30): Malaysian stocks may find support on Friday from quarter-end window dressing by fund managers on the final trading day of the first quarter. This could spur the FBM KLCI’s advance against the backdrop global economic growth concerns and anticipation of Malaysia’s next general election.

Analysts believe technical dynamics could still push the FBM KLCI to its historical high of 1,597 points, but the crucial question is whether the index can sustain its gains.

“Strategy wise, investors should capitalise on further rallies to take profits and stay nimble, in the wake of volatile external markets as well as ahead of the looming 13th general election,” Hong Leong Investment Bank Bhd research head Low Yee Huap wrote in a note.

The 30-stock FBM KLCI rose 1.69 points to close at 1,585.44 points on Thursday following a volatile trading session.

Stocks to watch on Friday include UNITED MALAYAN LAND BHD [] (UMLand), V.S. Industry Bhd, Berjaya Corp Bhd (BCorp), Selangor PROPERTIES [] Bhd, and CREST BUILDER HOLDINGS BHD []. Other stocks to watch are CypARK RESOURCES BHD [] and HAI-O ENTERPRISE BHD []

UMLand and Iskandar Investment Bhd have signed a collaboration agreement to conduct negotiations which will facilitate UMLand’s plan to acquire and develop tracts in Iskandar Malaysia, Johor .

V.S. Industry, a contract manufacturer of electronic products, said net profit fell 34% to RM6.64 million in the second quarter ended Jan 31, 2012 from RM10.1 million a year earlier, dragged down by lower income from its associates. Revenue, however, rose 4% to RM265.77 million from RM255.51 million.

BCorp’s net profit fell 53% to RM15.28 million in the third quarter ended Jan 31, 2012 from RM32.47 million a year earlier. Bottom line was hurt by operating expenses for its retail business and lower property sales, besides the absence of income from discontinued operations.

Selangor Properties’ net profit fell 89% to RM552,000 in the first quarter ended Jan 31, 2012 from RM5.06 million a year earlier due to currency translation losses.

Crest Builder and joint venture partner Detik Utuh Sdn Bhd will undertake a RM220 million mixed development in collaboration with landowner Syarikat Prasarana Negara Bhd.

Cypark posted net profit of RM6.51 million in the first quarter ended Jan 31, 2012, a marginal 0.6% lower than RM6.55 million a year ago but it remained upbeat for its core business of solid waste management and renewable energy.

Hai-O’s net profit rose 42.8% to RM9.06 million in the third quarter ended Jan 31, 2012 from RM6.34 million a year ago, boosted by its principal subsidiary, the multilevel marketing division. Its revenue increased 8.9% to RM62.79 million from RM57.62 million.

For the nine-month period, its net profit increased 21.6% to RM24.66 million from RM20.28 million in the previous corresponding period. Its revenue rose 2% to RM169.96 million from RM164.99 million.



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RHB Research maintains underperform on VS Industry

KUALA LUMPUR (Jan 3): RHB Research Institute is maintaining its Underweight on VS Industry and its fair value estimate of RM1.40 a share based on 6.0 times CY12 remains unchanged.

It said on Tuesday the 1QFY07/12 core net profit of RM9.6 million was within expectations. The 1Q revenue increased by 7.5% on-quarter on orders from new volume sales for Itron and Epson.

However, the first quarter earnings before interest and taxation (EBIT), more than doubled on-quarter as EBIT margin expanded by 2.8 percentage points from operating leverage effects on higher utilisation rates.

“Coupled with lower share of associate losses, core net profit grew 29.1% on-quarter. Separately, VSI declared an interim single-tier DPS of 5.0 sen,” it said.

RHB Research said it believes the near-term outlook remains challenging stemming from weaker consumer spending amidst the macroeconomic headwinds.

“However, we believe the new contribution of Keurig (coffee brewers) should partly mitigate weaker sales from existing customers (i.e. NextWindow and Dyson). Furthermore, in the longer term, we believe VSI could benefit from rising demand for outsourcing manufacturing capabilities,” it said.



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Stocks to watch: MAS, Boustead, Cypark, SMR, VS Industry

KUALA LUMPUR (Jan 1): The local stock market could see some profit taking in the first week of the trading year day after the recent run-up and last-minute window dressing activities. The rally was underpinned by local funds and pushed the FBM KLCI into positive territory for 2011.

The 30-stock index rallied more than 45 points over a seven-day trading period to end 2011 at 1,530.7. Total market capitalisation increased by RM11.38 billion over the same period to end the trading year at RM1,284.55 billion.

Among the stocks which could see trading interest following corporate developments include MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), Boustead Holding Bhd, environmental TECHNOLOGY [] and engineering specialist CYPARK RESOURCES BHD [], SMR TECHNOLOGIES BHD [], VS Industry Bhd and SILVER BIRD GROUP BHD [].

Last Friday, MAS unveiled its new management structure which included several new business units, the entry of two senior aviation experts and the departure of several top officials.

Focus would be on MAS' long-haul business, with its group chief executive officer Ahmad Jauhari Yahya taking on the role as CEO of long-haul. His deputy, Mohammed Rashdan, who is CEO of short-haul, would head the short-haul, group finance, aircraft finance & management, and in the interim helm commercial.

BOUSTEAD HOLDINGS BHD []’s 51% owned MHS Aviation Bhd is acquiring 16 aircraft for RM586.20 million from DRIR Equities Sdn Bhd. DRIR owns the other 49% of MHS.

Cypark’s earnings fell 21.5% to RM4.11 million in the fourth quarter ended Oct 31, 2011 from RM5.24 million a year ago due to lower profit margins than the previous quarter. Gross profit margin was 25%, a decline from the 36% a year ago when it benefited from design income fee and good material rate negotiated in the quarter.

SMR’s unit SMR HR Group Sdn Bhd has secured a RM14 million contract from the Human Resources Ministry. The one-year contract is to implement a trainining programme known as Accelerated Skills Enhancement Training Programme (ASET).

VS Industry Bhd’s earnings fell 10.9% to RM11.59 million in the firstquarter ended Oct 31, 2011 from RM13.01 million a year ago due to stiffer competition and losses from its China associate. Its revenue increased 14.1% to RM282.43 million from RM247.39 million while earnings per share were 6.39 sen compared with 7.27 sen.

Silver Bird called off its proposed placement exercise and a subscription commitment of up to RM100 million with GEM Global Yield Fund. It had to abort the proposals as Bursa Malaysia Securities Bhd rejected its waiver from complying with all the requirements to undertake back-to-back placements.

Malaysian Rating Corp Bhd (MARC) lowered its rating on MNRB Holdings Bhd’s (MNRB) RM200 million Islamic medium term notes (IMTNs) to A+IS from AA-IS after the reinsurer suffered two consecutive years of losses and thin cash flow coverage measures.

The ratings agency said while the outlook for the debt notes was stable, the downgrading reflected weakened holding company level financial metrics after losses for FY ended March 31, 2010 (FY2010) and FY2011.

JAKS Resources Bhd posted net losses of RM25.13 million in the fourth quarter ended Oct 31, 2011 from a net profit of RM1.19 million a year ago due to goodwill impairment adjustment of RM25.90 million.

Its revenue rose 9% to RM93.24 million from RM85.74 million mainly due to higher revenue recognition of works done for projects in the CONSTRUCTION [] division. Loss per share was 5.73 sen compared with earnings per share of 0.27 sen.

For the financial year ended Oct 31, 2011, it swung into net losses of RM22.89 million compared net profit of RM2.28 million in the previous financial year.



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VS Industry 1Q net profit dn 10.9% to RM11.59m on stiffer competition

KUALA LUMPUR (Dec 30): VS Industry Bhd’s earnings fell 10.9% to RM11.59 million in the first quarter ended Oct 31, 2011 from RM13.01 million a year ago as it was affected by stiffer competition and losses from its China associate.

It said on Friday that revenue increased 14.1% to RM282.43 million from RM247.39 million while earnings per share were 6.39 sen compared with 7.27 sen. It declared an interim dividend of 5.0 sen versus 2.0 sen a year ago.

VS Industry said at the pre-tax level, its profit fell RM5.2 million or 28.7% to RM12.90 million from RM18.10 million.

“The lower profit before tax was mainly due to increased competition in the electronic manufacturing services sector and higher share of loss from associate in China,” it said.

On the Malaysia operations, it said revenue increased by RM25.80 million to RM242.80 million from RM217 million a year ago. However, its pre-tax profit fell to RM12.8 million from RM14.6 million due to increased competition in the electronic manufacturing services sector.

On its Indonesian operations, it reported higher revenue of RM38.60 million from RM25.90 million a year ago. Its pre-tax profit remained comparable at RM3.7 million mainly due to change in business model mix.

When compared with the immediate quarter, VS Industry, said the first quarter just ended saw the group making a pre-tax profit of RM12.90 million compared to RM6.0 million in the preceding quarter.

VS Industry said the better performance was mainly due to higher sales generated by the Malaysian and Indonesian operations and lower share of loss from its associate in China.



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VS Industry gets new revenue boost but risks remain

VS Industry Bhd
(Dec 15, RM1.53)

Maintain underperform with fair value of RM1.40: We attended the opening ceremony of a new factory that will be dedicated to the production of Keurig Coffee Brewers. VSI has already commenced production of the first model, the Mini-Plus Brewing System, and will begin its maiden shipment in 3QFY12.

VSI’s production capacity for this model is about 23,000 to 25,000 units per month. We understand that VSI will add another assembly line with a capacity of 30,000 to 40,000 units per month for the shipment of another brewer model by FY13.

Presently, VSI’s capacity will only represent 11% to 13.9% of total brewer shipments of 5.8 million for Keurig. This could present VSI with an opportunity for higher sales volume with additional models.

Keurig is a pioneer and leading manufacturer of gourmet single-cup brewing systems for both household and corporate users and mainly caters for the US and Canada markets.

According to market research firm NPD, Keurig is estimated to have 20% to 25% of the total market for single-cup brewing systems in the US. The brewing system uses portion packs called the “K-Cup”, which contain ingredients to brew single servings of beverages.

The brewer provides a faster and a more convenient setup than conventional coffee machines.

Keurig is a wholly-owned subsidiary of US-based company Green Mountain Coffee Roasters (GMCR), which develops its own brand of portion pack K-Cup beverages. GMCR is listed on Nasdaq.

Keurig mainly markets its coffee brewers to North America. These brewers are considered high-end, with a price range of US$99.99 (RM320) to US$249.99 per unit, a 15% to 20% premium to its closest alternative. With the onset of a slowdown in economic growth especially in the US, this could result in down-trading by customers. The key risk is deterioration in the global macroeconomic environment. We maintain our forecasts for now.

Although VSI has yet to see a slowdown in orders, we remain wary on the global economic outlook. However, following the recent run-up to the share price, valuations are no longer compelling.

We downgrade our call to “underperform” (from “market perform”) with a fair value estimate of RM1.40 per share based on six times CY12 earnings per share. However, net dividend yield of 6.8% to 7.4% should provide some support to the share price. — RHB Research, Dec 15


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Keurig invests RM30m in Johor

Integrated electronic manufacturing services (EMS) provider V.S. Industry Bhd has invested about RM30 million to produce Keurig single-cup coffee brewer machines in Senai here.

The dedicated 2.4ha facility will see V.S. Industry producing Keurig Inc's single-cup brewers and accessories for exports to North America.

The facility's 200,000 square feet area will also be used for its packing, logistics and storage.

Executive chairman Beh Kim Ling said the factory will be the company's 11th facility to assemble electrical products.


It has the full cooperation from its US partner Kuerig to exclusively produce the coffee-brewing machines starting next year.

"We are happy that our US partners have the trust in us as Keurig Inc is wholly-owned by Green Mountain Cofee Roasters Inc (GMCR) and they are one of the 100 most popular companies listed on Nasdaq.

"Despite the strict safety and quality requirements for the contract, we hope to start our first shipment by the first half of next year," Beh said at a press conference on Tuesday.

The event was officiated by Johor Menteri Besar Datuk Abdul Ghani Othman. Also present was Keurig president Michelle Stacy, its vice-president, who is also Kuerig's co-founder, Dick Sweeney and Iskandar Regional Development Authority chief executive officer Ismail Ibrahim.

Meanwhile, Stacy said the company chose Johor as its investment location due to factors such as political stability, ease of logistics and also technical know-how.

"Malaysia was selected after we visited several other countries like Indonesia, Vietnam and India. Johor offers good infrastructure, port facilities and also sound government policies that support companies like us," she said.

Ghani said data from Malaysian Investment Development Authority (MIDA) and the Johor Investment Centre showed that the state is able to manage its own foreign direct investments (FDIs).

"For the past seven years, Johor managed to attract a record of RM38.6 billion worth of FDIs. This has created more than 18,000 jobs.

"We also can offer the best location for FDIs as we also work hand-in-hand with MIDA and the Ministry of International Trade and Industry to source for potential investors to Johor," Ghani added.



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VSI optimistic on securing more global clients

SENAI: Integrated electronic manufacturing services (EMS) provider VS Industry Bhd (VSI) plans to add more international brands to its portfolio of clients with the opening of its newest production facility here.

“Keurig Inc marks our first American-based customer. With Keurig, we expect to have more leading international brands as our customers in the future, especially from the US,” its managing director Gan Sem Yam told The Edge Financial Daily after the official opening of the plant in Johor yesterday.

The RM30 million plant with a total built-up area of 20,695 sq m is dedicated to producing single-cup coffee brewers and accessories for Keurig. Keurig is the market leader for coffee makers in North America, according to its president Michelle V Stacy, who attended the opening.

Gan said VSI will provide its full suite of EMS services to Keurig ranging from mould fabrication, printed circuit board assembly, packaging and logistics.

Keurig, a wholly owned subsidiary of Nasdaq-listed Green Mountain Coffee Roasters Inc, is expected to account for 20% to 30% of VSI’s revenue by 2013, Gan said.

He said 60% of VSI’s revenue in FY11 came from its main customer Dyson Ltd, a British company known for its vacuum cleaners, hand driers and bladeless fans.

(From left) VS Industry Bhd Beh Kim Ling, Stacy and Johor Menteri Besar Datuk Abdul Ghani Othman looking at the Keurig coffee brewer.

Gan said production from the new plant will begin immediately with a target to export the products to North America in the first quarter of 2012. Gan added that the plant is expected to reach its full annual production capacity of six million units in two years.

Stacy said Keurig is hoping to produce at least two models of the Keurig coffee brewers in VSI’s plant.

VSI is Keurig’s first EMS partner in Southeast Asia. Prior to VSI, Keurig manufactured its products in China, she said.

VSI is a leading EMS provider in consumer household electronics with extensive manufacturing services ranging from plastic injection mould design and finishing processes to printed circuit board production.

For FY11 ended July 31, VSI reported a 28.6% increase in revenue of RM1.03 billion from RM800.17 million the previous year, while its net profit increased to RM27.72 million from RM24.29 million a year ago. VSI attributed the improved year-on-year performance to better sales.

The company has set a dividend policy of 40%. In March, VSI announced to Bursa Malaysia that it has been paying dividends since its listing in 1998, with a payout ratio ranging from 20% to 60% of its annual net profit. It said on average, it has been paying more than 40% of net profit.

During FY11, VSI paid out total dividend of nine sen, which translates into a net dividend payout of 6.3% based on its closing price of RM1.42 yesterday. Over the last year, its stock has fallen 33.64% and traded between a year-high of RM2.23 and low of RM1.21.


This article appeared in The Edge Financial Daily, November 16, 2011.



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