-
1H27 results were within expectations. Revenue/adj. PATMI was 52%/59% of our FY27e forecasts, respectively. Adj. PATMI was better than expected due to the removal of Trio AI losses as discontinued operations. Adj. PATMI declined 2% YoY to HKD95.9mn. Gross margins were softer due to rising component prices. Trio AI ceased operations in August 2026. There is HKD127mn of assets held for sale (GPUs and servers).
- Interim dividend doubled to 8 cents, whilst special dividend rose 50% to 6 cents. Valuetronics has committed to return HKD300mn to shareholders via special dividends and share buyback. Around HKD122mn has been returned. Another HKD178mn (or S$8mn share buyback and S$0.03 in special dividends) is to be deployed by FY28.
- We raised our FY27e earnings by 4% to HK$169mn. We removed the Trio AI losses and lowered our effective tax assumptions. We lowered our target price to S$1.02 (prev. S$1.29), or 15x PE FY27e (prev. 20x PE), in line with the recent decline in industry valuations. The ACCUMULATE recommendation is unchanged. Earnings will be lacklustre in FY27e. There will be a drag from the jump in effective tax, the discontinuance of legacy consumer electronics products, component price pressure, and a lack of new customers. The capital returns and higher dividends will keep the dividend yield attractive in the near term.
Continue Reading
