But it's just the tip of the iceberg.
According to OCBC Investment Research, Valuetronics Holdings Limited (VHL) reported its 3QFY13 results this morning. Revenue from continuing operations fell 16.3% YoY to HK$508.1m, or 10.5% below our forecast.
Profit from continuing operations dipped 41.8% YoY to HK$25.6m. Adjusting for exceptional items, we estimate core PATMI of HK$23.9m, a 17.9% YoY decline, and this fell short of our projection by 16.2%.
VHL continued to incur operating losses (HK$1.1m) from its Licensing division, but this was a significant reduction from 2QFY13 (HK$31.2m) which includes HK$28.0m worth of one-off termination expenditure and impairment charges given its decision to cease operations of the division.
We expect VHL’s outlook to remain challenging, as margin pressure from rising labour costs and slower growth from its largest customer are likely to weigh at least in the near term.
We will provide more details after a teleconference call with management. We maintain our HOLD rating but our S$0.20 fair value estimate is currently under review. (Wong Teck Ching Andy)
Do you know more about this story? Contact us anonymously through this link.