$Valuetronics(BN2.SI)
Update on 27 Jul: The Signify (formerly Philips Lighting) 2Q2018 results are out today. The Home division which is the Smart LED lighting Q2 sales is about the same low level as Q1 which was due to the high inventory levels in US retail. The good news mentioned in the results is the high inventory levels "have now return to normalized levels."
So we should expect Valuetronics Q1FY19 CE sales to remain poor but should improve from Q2.

Attended the AGM today. Was glad to find out that the drop in ICE revenue in the 4QFY18 was due to the Chinese New Year holidays and not due to a drop in orders. This would mean the next quarter's results should see ICE revenue going back up. The Chairman, Mr Tse confirmed that they have started supplying to the second automaker and they are the only supplier. You can consider the sales to the automakers as an economic moat due to the tedious qualification process.
There was no update on the Smart LED lighting sales except that the CFO revealed that Smart LED makes up 20 to 25% of total 2018 revenue. Would need to lookout for Philips Lighting results later this week.
At the start of the AGM, they showed a video of their production automation. It was quite impressive as there were no operators present at the line. The Chairman has reveled that the production line for two products are fully automated. I believe this would further reduce Valuetronics cost.
Another good news is that the management has gone over the items on the US Tariff List 1, 2 & 3 and concluded that the impact to Valuetronics would be insignificant. I am confident that my earlier price target of $0.95 can be achieved this year baring a full fledged Trade War caused by Trump.

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32 likes 32 comments
IAmPatrick

Reply to @Pizzaprata : So far holding well, guess market already counted in signify losses

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Clementcwlam

I had been holding Valuetronics shares for a fairly long time...riding the tide of rising and dropping prices. Will be buying more next week, as after XD
I expect their price will probably dipped

layers

Reply to @Clementcwlam : whole so long must b huat alot. divdend also up alot

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l0nEr

thanks for the colour.. very cheap stock

layers

got cbance to get more or tml fly?

YNWA

thanks for sharing.

kc2024

Based on previous guidance, Q1 should still be weak due to Philips Lightings but am glad that they started supplying for the second auto customer.

Pizzaprata

Reply to @kc2024 : It may not be as good as Q3FY18 but it should be better than Q4FY18

kc2024

Thanks for sharing. Any hint of interim dividend?

opy

Reply to @kc2024 : ya, agree. lack confidence indeed.

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Fries

Any good food at Agm ?

MaoZD

Thanks for the sharing. And if anyone wants the counter party, it is crédit suisse when I sold some today

Gracian

wow, this kind of excellent news sure will HUAT somemore. Happy song song man that u attended the AGM.

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$Valuetronics(BN2.SI)
The 1Q2019 results are out and are in line with my write up after the AGM (link: https://www.investingnote.com/posts/924265). As expected the CE revenue continued to be poor -15.6% yoy due to high inventory of Smart LED lighting in US. The good news is that the ICE revenue grew by 15.2% yoy driven by the strong demand of automotive customers.
The management is positive of not only CE sales recovering but "Expects consumer lifestyle products in the CE segment to continue its growth momentum on the back of new series of innovative products". They also expect automotive products to remain as the growth driver for ICE revenue.
The market has so far agreed with me that these are positive news despite the 1Q2019 profit only increase by 1.9%
Good luck to those who are vested.

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Expiry:
Target Price
$0.95
(+39.71%)
NOW:

$Valuetronics(BN2.SI)
Attended the AGM today. Was glad to find out that the drop in ICE revenue in the 4QFY18 was due to the Chinese New Year holidays and not due to a drop in orders. This would mean the next quarter's results should see ICE revenue going back up. The Chairman, Mr Tse confirmed that they have started supplying to the second automaker and they are the only supplier. You can consider the sales to the automakers as an economic moat due to the tedious qualification process.
There was no update on the Smart LED lighting sales except that the CFO revealed that Smart LED makes up 20 to 25% of total 2018 revenue. Would need to lookout for Philips Lighting results later this week.
At the start of the AGM, they showed a video of their production automation. It was quite impressive as there were no operators present at the line. The Chairan has reveled that the production line for two products are fully automated. I believe this would further reduce Valuetronics cost.
Another good news is that the management has gone over the items on the US Tariff List 1, 2 & 3 and concluded that the impact to Valuetronics would be insignificant. I am confident that my price target is achievable baring a full fledged Trade War caused by Trump.

Old post:
This selldown has given me a great opportunity to load up on Valuetronics shares. I have been invested in Valuetronics shares since 2012 at 21 cents. This stock has seen many selldowns since then each time giving me a chance to load up. The last time was in 2015 also involving Philips when the company decided to exit the mass market LED lighting business as the margins were too low. It was the right decision and the company recovered and went into higher value products. This is a great dividend stock and I am happy to hold it until the stock recovers. However last year I have sold most of my Valuetronics stock as the price was increasing faster than the profits.
The reason for the selldown this time is really overblown as I see it. If you see the recent results of Philips Lighting NV, the Home division sales which is the smart LED lighting supplied by Valuetronics, the sales in Q1 2018 did drop by half compared with the Q4 2017 but if you compare with the other quarters, sales is down by a moderate 10 to 20%. Philips mentioned that it’s to allow for inventory reduction at their partners and expect sales in 2H2018 to normalise and achieve double digit growth.
I estimate the total sales to Philips to be about 25-30% of revenue, however the profit margin of this is lower than the ICE division which makes up 50% of total revenue. I estimate this drop in sales should not affect Valuetronics profit by more than 10%.
Furthermore, in June last year Valuetronics received Qualification approval from a second automaker so I expect ICE division revenue to continue growing to offset any drop in sales in the CE division.
My target price of 95 cents is based on PE Ratio 13 for FY18 results. Vested, Please DYODD.

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