Mainboard-listed Valuetronics Holdings have reported earnings of HK$56.6 million ($9.8 million) for the 1HFY2022 ended September, 38.1% lower than earnings of HK$91.5 million in the same period the year before.
Accordingly, earnings per share (EPS) for the half-year period fell 38.1% y-o-y to 13.0 HK cents.
1HFY2022 revenue fell 7.3% y-o-y to HK$1.01 billion. Though cost of sales during the period fell 4.2% y-o-y to HK$870.9 million, Valuetronics’ gross profit stood 22.8% y-o-y lower at HK$143.6 million for the 1HFY2022.
Gross profit margin also suffered with a 2.8 percentage point dip y-o-y to 14.2% in the 1HFY2022.
See: Analysts say outlook remains challenging for Valuetronics despite FY21 results beating expectations
The lower figures were attributable to the severe shortages of certain key electronic components, which has affected the group’s ability to meet orders.
The lower gross profit margin fell due to higher component prices on the back of tight supply and increased labour and operating costs in China, as well as an appreciating renminbi.
Segmentally, Valuetronics’ revenues for its consumer electronics (CE) and industrial & commercial electronics (ICE) fell.
During the 1HFY2021, CE revenue fell 12.5% y-o-y to HK$319.4 million due to the cancellation and deferral of customer orders as a result of the components shortage.
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Meanwhile, ICE revenue fell 4.8% y-o-y to HK$695.1 million due to a significant drop in sales to an automotive customer who switched their production from Valuetronics’ factory to another vendor in North America.
The fulfilment of certain orders under the ICE segment was also affected by the components shortage.
All these were offset, however, by revenue growth from a printer customer benefitting from e-commerce sales and a sensing devices customer benefitting from their product’s application in the logistics industry.
As at end-September, cash and cash equivalents stood at HK$936.7 million.
Due to the performance for the 1HFY2022 and the “challenging business environment”, Valuetronics has declared an interim dividend of HK4 cents per share from HK5 cents in the 1HFY2021.
The dividend is payable on Dec 3.
Looking ahead, Valuetronics says it expects the global components shortage to affect its ability to fulfil customer orders in a timely manner.
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This, with the strong renminbi and increasing operating cost in China will continue to erode its profit margin in the near term.
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To mitigate these impacts, Valuetronics says it will continue looking for new business opportunities, identify new supply sources, qualify alternative parts and negotiate new prices with customers.
“Severe shortages of certain key electronic components have affected the group’s ability to meet orders, leading to a decline in revenue and a corresponding decrease in profit, this situation will continue to affect us in the near term. Nevertheless, our expansion plan in Vietnam is on track. Assuming no worsening of the Covid-19 situation in Vietnam, our Vietnam campus is scheduled to go into mass production by the end of FY2022 after passing ISO and customer audits,” says Ricky Tse Chong Hing, chairman and managing director of Valuetronics.
“There have been positive responses from potential customers regarding our regional manufacturing footprint strategy, and we are cautiously optimistic about revenue contributions from these new opportunities in the financial year ending Mar 31, 2023,” Tse adds.
Shares in Valuetronics closed 0.5 cent lower or 0.84% down at 59 cents on Nov 9.
