Excerpts from UOBKayHian report

Valuetronics (SGX: BN2)

• Valuetronics ’s 1HFY23 net profit of HK$58m (+2% yoy and qoq) was in line with our expectation, making up 50% of our FY23 estimate.
• 1HFY23 revenue went up 4% yoy due to increased customer demand. However, margins have fallen due to higher component prices and supply chain disruptions.
• A cautious outlook is maintained amid market uncertainties, the Russia-Ukraine conflict and US Fed rate hikes.

Maintain HOLD and target price of S$0.52.

Valuetronics results in line with expectations

Valuetronics’ (VALUE) 1HFY23 net profit of HK$58m (+2.3% yoy, +1.8% qoq) was in line our expectation, making up 50% of our FY23 estimate. Revenue increased 3.6% yoy due to greater demand in the US, Hong Kong, Indonesia and Canada segments. However, we note that gross and net margins fell by 1.7ppt and 0.1ppt respectively, due to:

• higher component prices caused by tight supply, and
• impact of the group’s supply chain disruption and productivity.

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