Valuetronics’ “Vietnam manufacturing base not only serves as tariff diversification, but also captures new orders from global customers seeking a reliable, cost-competitive alternative to China,” they write, noting that the company’s newly expanded capacity in Vietnam could help boost output by around 30%.
UOB Kay Hian expect Valuetronics “to reap earnings growth in FY26 and beyond” due to its successful diversification of its customer base. New customers have contributed significantly to 1H26, Cheong and Mo note, and include a Canada-based industrial and commercial electronics company providing network access solutions and a consumer electronics company supplying to a leading global entertainment conglomerate.
Cheong and Mo also see the Valuetronics’ high net cash position of HK$1.1 billion, equivalent to 50% of the company’s market cap, as a potential catalyst for the company. The cash can be used to finance share buybacks or be distributed as dividends, thus boosting shareholder returns.
UOB Kay Hian’s target price of $1.03 is based on 13x PE for FY2027 earnings, which is at +1SD above the mean. Cheong and Mo raised Valuetronics’ target price to $1.03 in their Nov 14 note, a 24% increase from their previous target price of 83 cents.
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Valuetronics is “currently trading at 12x FY27F PE, a significant 35% discount to Singapore peers’ 19x PE,” Cheong and Mo write. The company’s dividend yield of around 6% is attractive, and is over 100% higher than the 1.4% peer average. “We believe valuations remain undemanding, given VALUE’s defensive earnings profile and strong cash generation,” they add.
Valuetronics shares are down by 0.58% as at 4.06 pm, trading at 86 cents. The company’s stock is up by nearly 40% year to date.
