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Share
Price:
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MYR1.54
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Target
Price:
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MYR1.78
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Recommendation:
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Buy
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Dusting off the
competition
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VSI’s established status as a vertically integrated player
is a testament of its capabilities as a one-stop shop contract
manufacturer. Currently serving several growing world-renowned consumer
electronics brands including a prominent global consumer electronics
brand (Customer X) and an American single-serve coffee maker, Keurig,
we expect stronger orders from these existing key clients to drive our
projected 14% 3-year earnings CAGR. Initiate coverage on VSI with a BUY
and MYR1.78 TP.
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FYE Jul (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
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1,936.9
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2,175.6
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2,564.1
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3,115.3
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EBITDA
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239.2
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226.4
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278.2
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341.2
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Core net profit
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135.7
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135.1
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142.6
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187.1
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Core FDEPS (sen)
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10.4
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8.5
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9.0
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11.8
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Core FDEPS growth(%)
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111.8
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(18.2)
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5.6
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31.3
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Net DPS (sen)
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4.8
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4.7
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4.1
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5.0
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Core FD P/E (x)
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14.8
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18.0
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17.1
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13.0
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P/BV (x)
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2.6
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2.3
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1.8
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1.6
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Net dividend yield (%)
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3.1
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3.1
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2.7
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3.3
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ROAE (%)
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20.4
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14.2
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14.0
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14.4
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ROAA (%)
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8.0
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7.0
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6.9
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8.2
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EV/EBITDA (x)
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8.5
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9.2
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8.7
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7.2
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Net debt/equity (%)
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17.2
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18.4
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7.2
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net cash
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NEWS
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Outside Malaysia:
E.U: Draghi rebuts Trump lines on currency wars, bank
rules. Mario Draghi took the Trump administration to task, addressing
recent assertions that Germany is a currency manipulator and warning
against the rollback of post-crisis financial regulation. Speaking at a
hearing in Brussels, the European Central Bank president responded to the
charge by U.S. National Trade Council Director Peter Navarro and others
that Germany is using a “grossly undervalued” euro to gain an unfair
trade advantage. “The ECB has not intervened in the foreign exchange
markets since 2011,” Draghi told European Union lawmakers, adding that
Germany’s trade surplus was the result of productivity gains. “Germany
has a significant bilateral trade surplus with the U.S., a material
current account surplus, but it has not engaged in persistent one-sided
intervention in the foreign exchange market.” (Source: Bloomberg)
U.K. Business says Brexit already having a negative
effect. Brexit has already damaged businesses even before Prime Minister
Theresa May triggers the start of Britain’s withdrawal from the European
Union, according to a survey of the country’s largest companies. More
than half – 58% -- of the top executives at Britain’s biggest firms that
responded to the Ipsos MORI “Captains of Industry” poll said the vote to
quit the bloc has had a negative impact on their businesses. Two-thirds
of the chief executives, chairmen and directors interviewed for the
survey said they believed the business situation would worsen in the next
12 months. (Source: Bloomberg)
Russia: Inflation decelerated more than forecast in
January, dropping to the weakest pace since 2012, as consumer demand
remained a drag on price pressure by lagging behind the broader economic
recovery. Annual inflation eased for a seventh month, slowing to 5% YoY
from 5.4% YoY in December, the Federal Statistics Service said. Prices
increased 0.6% in the month. (Source: Bloomberg)
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Other News:
Gadang: To buy land for MYR56m cash. Its indirect unit,
Gadang Construction S/B, has entered into a sale and purchase agreement
with Nusvista Development S/B to buy leasehold commercial land in
Damansara Perdana in Petaling Jaya for MYR55.7m cash. It bought the 2.66
acres of land for investment due to its strategic location within
Damansara Perdana, and since it is likely to appreciate in value.
(Source: The Star)
Gabungan AQRS: Sells land for MYR55.69m. Its wholly owned
subsidiary Nusvista Development S/B is selling its leasehold land in
Mukim Sungai Buloh, Petaling Jaya for MYR55.69m cash. Nusvista yesterday
signed a sale and purchase agreement with Gadang Construction S/B. It
said the land measures 10,779 sq m, equivalent to 2.66 acres or
116,024.19 sq ft. At a price tag of MYR55.69m, this means that Gadang is
buying the land at MYR479.99 per sqf. As at Dec 31, 2016, the land had a
net book value of MYR38.58m. Gabungan AQRS expects the sale of the land
to yield a gain of MYR11.69m net of tax. (Source: The Edge Financial
Daily)
AWC: Wins RM14.6m Putrajaya jobs. Its wholly-owned
subsidiary M&C Engineering and Trading S/B (M&C) has been
appointed subcontractor by Sunway Construction S/B for MYR14.64m worth of
jobs for the government office buildings in Putrajaya. AWC said M&C
has been awarded two packages, which involved the supply, delivery,
installation, testing, commissioning and maintenance of fire protection
services for the project known as “Parcel F” in Precinct 1, Putrajaya.
(Source: The Sun Daily)
Uzma: Bags Petronas Carigali contract. Its wholly-owned
subsidiary Uzma EngineeringS/B was awarded the three-year contract, which
commenced from Dec 1, 2016 till Nov 30, 2019. The contract has two
extension options of one year each (3+1+1 years) for cased hole logging
services across the Pan Malaysia area. This will enable Uzma’s wireline
division, better known as uzmaWIRELINE, to pursue potential collaboration
with other international companies, which will further strengthen its
presence in Malaysia; particularly for electric wireline logging
services. (Source: The Sun Daily)
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