Expansion, new orders to lift VSI's earnings despite trade uncertainty
CIMB Research cut its earnings per share forecasts by between 10% and 20% for FY25 to FY27.
PETALING JAYA: Analysts remain divided on the outlook for electrical and electronics manufacturing company VS Industry Bhd (VSI) following the release of its results for the third quarter of its financial year ending July 31 (3Q25), which came in below expectations.
VSI posted net profit of RM23.77mil and revenue of RM909.41mil for the quarter. This was down from RM54.42mil and RM1.01bil in the same quarter a year ago.
The results came in below CIMB Research's expectations, accounting for 49% of its full-year estimate and 52% of consensus.
The year-to-date earnings declined 42% year-on-year and was said to be mainly due to weaker demand, higher labour costs in Malaysia, and start-up expenses from its new operations in the Philippines.
Given the ongoing demand uncertainty amid subdued consumer sentiment and possible tariffs, CIMB Research cut its earnings per share forecasts by between 10% and 20% for FY25 to FY27.
'Near-term order flows from Malaysia and Singapore will remain dependent on evolving consumer sentiment and clarity on US tariffs following the end of the 90-day grace period in early July,' CIMB Research said.
Following its earnings revision, CIMB Research maintained a 'hold' call on VSI with a lower target price of 79 sen, adding that the discount appropriately captures the heightened earnings risks.
Hong Leong Investment Bank Research (HLIB Research) also flagged concerns about the group's earnings visibility.
HLIB Research reported that VSI's core profit after tax and minority interest of RM69.6mil for the nine months of its current financial year (9M25) was 26.3% lower, meeting only half of its full-year forecast.
'While we anticipate some frontloading activity from US-exposed customers in 4Q25, we see downside risk to management's FY26 guidance given potential inventory adjustments and an uncertain order environment after frontloading,' HLIB Research said.
Despite this, the research house pointed to a potential earnings boost from the ramp-up of the group's Philippines operations and a newly secured contract from a big customer.
HLIB Research maintained its 'hold' rating on VSI with a lower target price of 72 sen, from 86 sen.
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