Valuetronics Holdings' profits dropped 39.6% to HK$78.7m

No thanks to losses from its licensing division.

According to OCBC Investment Research, Valuetronics Holdings Limited (VHL) reported FY13 results which were within its expectations. 

OCBC noted that net profit from continuing operations fell 26.1% to HK$118.4m, while net losses from its now discontinued Licensing division widened by 32.7% to HK$39.8m, resulting in overall PATMI decline of 39.6% to HK$78.7m.

Here's more:

Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just 0.6% shy of our forecast. 

The decline was attributed to a 6.1% fall in sales from its Consumer Electronics segment, but partially offset by a 4.0% rise in revenue from its Industrial and Commercial Electronics (ICE) customers.

Excluding the oneoff termination expenditure and impairment of PPE from its Licensing division and other exceptional items, we estimate that core PATMI for FY13 fell 14.7% to HK$103.7m. This was 1.1% above our estimate.

Dividends cut but still translates into a yield of ~6.0%. Given the sharp decline in VHL’s reported PATMI, its DPS for FY13 was consequently slashed from HK$0.17/share (this includes a HK$0.01 special dividend) to HK$0.08/share.

This represents a payout ratio of ~36.5% and was below our HK$0.11 DPS forecast. However, this still translates into a decent yield of ~6.0%.