KUALA LUMPUR: Hong Leong Investment Bank Bhd's (HLIB Research) has upgraded its call on VS Industry Bhd to 'hold' and raised its target price to RM1.04 a share on the company's promising outlook.
The research firm said things are looking for the electronics manufacturing services provider with a few customers looking to launch a new products.
VSI's nine-month earnings of RM89.2 million came in within Hong Leong Investment Bank Bhd's (HLIB Research) expectations at 78 per cent but missed 55 per cent consensus' full year forecasts.
Year-to-date, the company's topline softened by 11 per cent mainly coming from the drag in sales from the previous two quarters.
Overall all regions except for Singapore, recorded a decline, namely Malaysia which dropped 17 per cent Indonesia (down nine per cent) and China (down 24 per cent).
Core earnings fell 37 per cent to RM89.2 million due to lower sales coupled with higher effective tax rate.
"We gather that outlook is looking promising with a healthy pickup in sales orders from VSI's key customers following improved consumer sentiments and normalisation of customers' inventory levels. Additionally, things are also looking up with launches of several new models by certain customers which will keep VSI occupied in the mid-term," it said.
HLIB Research upgraded its call for the stock to "Hold" from "Sell" previously with a higher target price of RM1.04 from 71 sen.
The research firm said VSI is poised to strengthen its vertical integration capabilities with the recent successful development of several new processes in-house.
"Despite the macro uncertainties we opinethat things are gradually looking better for VSI with the recovery in orders from keycustomers," it added.
