Here’s why Valuetronics’ test drive in the automobile segment is set to drive growth

The segment is expected to grow by 20%.

Acquiring its very first customer in the automobile industry, the electronics firm may have struck an investment gold, as customers become more fond of integrating their smartphones and tablets with their vehicles.

According to a report by UOB Kay Hian, Valuetronics will supply data and media connectivity modules to the customer, while the modules are for portable smartphone/tablets devices and in-car infotainment systems, allowing users to safely access content in their vehicle through emerging infotainment software solutions.

Additionally, while UOB Kay Hian says it contributed only 5-10% of the firm’s total revenue in 2016 since the customer was only acquired in the middle of the year, the segment is expected to grow by 15-20% as customers clamour for more connectivity.

Meanwhile, with the firm’s exit from the LED light bulb segment, working capital has significantly improved on the back of better group credit terms, UOB Kay Hian said.

“As a result, Valuetronics’ net cash plus AFS securities positions have ballooned to S$0.35/share. We believe this should form a strong support for share price,” the report added.