Valuetronics to boost revenue growth by 20% in FY16-17

It will come from the ICE segment.

For the past two years, Valuetronics has gained at least one new customer each year, which contributes to at least 3% of its revenue.

According to a report RHB, management highlighted that it expects double-digit growth YoY from its ICE segment in FY16 just from existing customers with new products/models.

The company is constantly and actively trying to get new customers on board and analysts believe that there might be one or two in the pipeline ahead, which will help drive its ICE growth.

All in all, the ICE segment will register 20% annual revenue growth over FY16-17, with gross margins staying above 19%.

Here’s more from RHB Group:

We expect dividends to at least be comparable to or better than its FY14 payout of HKD0.20, provided the company performs better than our FY15 estimates, which we believe would be highly likely in view of its robust production activities when we visited its factories in Shenzhen last week. This could result in a potential FY15F dividend yield of around 8-9%(with special dividend).

Going forward, as its ICE segment yields much higher margins, we believe that it would make up for any decline in its consumer electronics (CE) segment and result in a better gross margin and NPAT for FY16. In addition, with Philips also known to be divesting its lighting business, we believe that it may become like Osram and would be able to react more actively to changes in market demand as well as regain market share– which is a positive for Valuetronics.