Latest news with #VS
Yahoo
21-04-2025
- Business
- Yahoo
Is V.S. Industry Berhad's (KLSE:VS) Stock Price Struggling As A Result Of Its Mixed Financials?
With its stock down 29% over the past three months, it is easy to disregard V.S. Industry Berhad (KLSE:VS). It is possible that the markets have ignored the company's differing financials and decided to lean-in to the negative sentiment. Fundamentals usually dictate market outcomes so it makes sense to study the company's financials. In this article, we decided to focus on V.S. Industry Berhad's ROE. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. We've discovered 2 warning signs about V.S. Industry Berhad. View them for free. The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for V.S. Industry Berhad is: 7.7% = RM174m ÷ RM2.3b (Based on the trailing twelve months to January 2025). The 'return' refers to a company's earnings over the last year. One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.08 in profit. View our latest analysis for V.S. Industry Berhad So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don't share these attributes. At first glance, V.S. Industry Berhad's ROE doesn't look very promising. Next, when compared to the average industry ROE of 10%, the company's ROE leaves us feeling even less enthusiastic. Thus, the low net income growth of 3.3% seen by V.S. Industry Berhad over the past five years could probably be the result of the low ROE. Next, on comparing with the industry net income growth, we found that V.S. Industry Berhad's reported growth was lower than the industry growth of 13% over the last few years, which is not something we like to see. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. What is VS worth today? The intrinsic value infographic in our free research report helps visualize whether VS is currently mispriced by the market. Despite having a normal three-year median payout ratio of 44% (or a retention ratio of 56% over the past three years, V.S. Industry Berhad has seen very little growth in earnings as we saw above. So there could be some other explanation in that regard. For instance, the company's business may be deteriorating. In addition, V.S. Industry Berhad has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 49%. Still, forecasts suggest that V.S. Industry Berhad's future ROE will rise to 14% even though the the company's payout ratio is not expected to change by much. Overall, we have mixed feelings about V.S. Industry Berhad. While the company does have a high rate of profit retention, its low rate of return is probably hampering its earnings growth. Having said that, looking at the current analyst estimates, we found that the company's earnings are expected to gain momentum. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
07-04-2025
- Business
- Yahoo
Is There Now An Opportunity In V.S. Industry Berhad (KLSE:VS)?
While V.S. Industry Berhad (KLSE:VS) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the KLSE over the last few months, increasing to RM1.17 at one point, and dropping to the lows of RM0.80. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether V.S. Industry Berhad's current trading price of RM0.80 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at V.S. Industry Berhad's outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. The stock seems fairly valued at the moment according to our valuation model. It's trading around 6.7% below our intrinsic value, which means if you buy V.S. Industry Berhad today, you'd be paying a fair price for it. And if you believe that the stock is really worth MYR0.86, then there isn't much room for the share price grow beyond what it's currently trading. What's more, V.S. Industry Berhad's share price may be more stable over time (relative to the market), as indicated by its low beta. View our latest analysis for V.S. Industry Berhad Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for V.S. Industry Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation. Are you a shareholder? It seems like the market has already priced in VS's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value? Are you a potential investor? If you've been keeping tabs on VS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. While conducting our analysis, we found that V.S. Industry Berhad has 1 warning sign and it would be unwise to ignore this. If you are no longer interested in V.S. Industry Berhad, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
20-03-2025
- Business
- Yahoo
V.S. Industry Berhad (KLSE:VS) Shares Could Be 38% Below Their Intrinsic Value Estimate
Using the 2 Stage Free Cash Flow to Equity, V.S. Industry Berhad fair value estimate is RM1.46 V.S. Industry Berhad is estimated to be 38% undervalued based on current share price of RM0.91 The RM1.30 analyst price target for VS is 11% less than our estimate of fair value How far off is V.S. Industry Berhad (KLSE:VS) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. There's really not all that much to it, even though it might appear quite complex. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. See our latest analysis for V.S. Industry Berhad We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (MYR, Millions) RM130.2m RM57.3m RM339.5m RM411.5m RM466.7m RM515.5m RM558.8m RM597.7m RM633.3m RM666.5m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x2 Est @ 13.40% Est @ 10.46% Est @ 8.40% Est @ 6.96% Est @ 5.95% Est @ 5.25% Present Value (MYR, Millions) Discounted @ 11% RM117 RM46.6 RM249 RM272 RM279 RM278 RM272 RM262 RM250 RM238 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM2.3b The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 11%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = RM667m× (1 + 3.6%) ÷ (11%– 3.6%) = RM9.5b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM9.5b÷ ( 1 + 11%)10= RM3.4b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is RM5.7b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of RM0.9, the company appears quite undervalued at a 38% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at V.S. Industry Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 11%, which is based on a levered beta of 1.224. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Strength Debt is not viewed as a risk. Dividends are covered by earnings and cash flows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Electronic market. Opportunity Annual earnings are forecast to grow faster than the Malaysian market. Good value based on P/E ratio and estimated fair value. Threat Revenue is forecast to grow slower than 20% per year. Although the valuation of a company is important, it is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For V.S. Industry Berhad, there are three additional items you should consider: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with V.S. Industry Berhad , and understanding this should be part of your investment process. Future Earnings: How does VS's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the KLSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
