Valuetronics profit up 9.5% to HK$31.6mn

The group will continue its efforts in business development to enrich its customer base and product portfolio amidst uncertain times.

Mainboard listed Valuetronics Holdings Limited (“Valuetronics”), a premier design, manufacturing partner for the world’s leading brands in the consumer, commercial and industrial electronics sectors and a licensee of a well-known brand for home comfort appliances, on Friday announced that its net profit registered for its first quarter three months ended 30 June 2011 (“1Q FY2012”) increased by 9.5% to HK$31.6 million as compared to the previous corresponding financial period (“1Q FY2011”).

Commenting on the results, Mr Ricky Tse Chong Hing, Chairman and Managing Director remarked, “Our first quarter financial results had healthy contributions from our three business segments. With the current global market uncertainties and concerns, we expect business conditions to remain challenging in FY2012. Nevertheless, we will remain vigilant and continue improving business and financial fundamentals.”

The Group registered a revenue of HK$527.1 million for 1Q FY2012, a 33.4% or HK$132.0 million increase from HK$395.1 million in 1Q FY2011. This increase was driven by significant growth in the number of sales orders received from its major OEM customers, coupled with steady revenue contributions from the Licensing business.

The OEM segment continued to show strong and positive growth, which was mainly contributed by the significant increase in demand from one of the Group’s key customers. Due to stable growth in the number of sales orders received from its existing major customers, the Group’s ODM segment revenue grew marginally by 6.4%.

Valuetronics’ Licensing business which commenced in 1Q FY2011, contributed HK$14.1 million in revenue for 1Q FY2012, according to a Valuetronics report.

Commenting on its Licensing business, Mr Tse said, “Our licensing products have been well-received by our customers. Our sales and marketing team is increasing their efforts to penetrate major retailers to enhance our US market footprint.”

Gross profit rose by 27.7% to HK$84.2 million in 1Q FY2012 from HK$65.9 million recorded in 1Q FY2011, whilst gross profit margins slightly decreased by 0.7 percentage points to a stable 16.0%, largely due to an increase in OEM product contribution to the sales mix for the period under review.

As the Group’s ongoing marketing efforts is essential for it to capture new sales opportunities, coupled with the full quarter effect of the Licensing business (including salaries and allowances for marketing staff and sales commissions payable to sales representatives) selling and distribution cost correspondingly increased 25.5% to HK$18.7 million in 1Q FY2012 from HK$14.9 million in 1Q FY2011.

Administrative expenses for 1Q FY2012 also went up by 47.2% to HK$30.1 million from HK$20.5 million in 1Q FY2011, due to increases in salaries and bonuses for administrative and corporate employees as well as the full quarter effect of the staff costs and higher headcount incurred for the Licensing business.

Overall, Valuetronics recorded a profit after tax of HK$31.6 million for 1Q FY2012, which rose 9.5% from HK$28.9 million recorded in 1Q FY2011. As a result, earnings per share registered for 1Q FY2012 was HK8.9 cents compared to HK8.2 cents1 in 1Q FY2011. Net asset value per share2 as at 30 June 2011 and as at 31 March 2011 was HK143.8 cents and HK133.9 cents respectively.

Moving forward, the Group will continue to remain vigilant and continue improving its business and financial fundamentals which include its design and development capabilities, production efficiencies and inventory management. Additionally, the Group will continue its efforts in business development to enrich its customer base and product portfolio.