This article first appeared in The Edge Malaysia Weekly on August 28, 2017 - September 3, 2017

A popular symbol of virtue in classic Chinese philosophy, bamboo grows sturdily upward despite the plant’s slender appearance — an apt metaphor for the strength and resilience of ViTrox Corp Bhd. Since its inception in 2000, it has never failed to deliver a profit. It is fitting that the semiconductor player chose to embed the image of printed circuit boards onto the bamboo shoots and leaves that adorn the cover of its 2016 annual report.

Listed on the Main Market of Bursa Malaysia since 2005, the Penang-based ViTrox is one of the leading solutions providers of automated vision inspection systems and equipment for the semiconductor and electronic packaging industries.

ViTrox serves customers such as semiconductor outsourced assembly and test companies, printed circuit board manufacturers, electronics assemblies companies, electronics manufacturing services providers and contract manufacturers around the world. The group has an extensive global distribution network with a wide customer base in Malaysia, Thailand, China, Taiwan, Japan, South Korea, Brazil and the US.

In its financial year ended Dec 31, 2013 (FY2013), ViTrox broke its record by achieving annual sales turnover of more than RM100 million. Encouraged by this performance, in FY2016, ViTrox set another new record, achieving turnover of more than RM200 million and a new profit before tax record of RM61 million.

Moving forward, ViTrox remains bullish for an even better FY2017. It expects new products and continued expansion of its customer base into new territories to drive double-digit growth for its top and bottom lines.

“We are looking at [achieving] more than RM300 million revenue in the short term. The growth [we are charting] is not a one-off thing. There is a pattern, our growth is gaining momentum. And we want to make sure our bottom line grows in tandem with the top line,” ViTrox co-founder and managing director Chu Jenn Weng told The Edge Financial Daily in March.

It is worth noting that ViTrox registered a three-year profit after tax compound annual growth rate of 39.2% as its net profit attributable to shareholders grew to RM64.8 million in FY2016 from RM24.1 million in FY2013. Weighted and graduated return on equity over the same three-year period was also decent at over 27%. Annualised total returns over three years and the three months ended June 30 was 70.6%, beating peers.

A one-for-one bonus issue in May helped to push the share price to a record high of RM7.27 on June 20. It is worth noting that this is ViTrox’s second bonus issue since its listing 12 years ago.

In fact, shares in ViTrox have surged 14 times over the last 3½ years. The counter has risen from a post-bonus adjusted price of 29 sen on March 31, 2014 to RM4.03 on June 30, 2017. Year to date, ViTrox’s share price has more than doubled to close at RM4 on July 21, giving it a market capitalisation of RM1.88 billion.

Impressive capital gains aside, ViTrox has consistently paid dividends every year since listing. The company declared a total dividend per share of 6.5 sen, with a total distribution of about RM15.3 million for FY2016, representing a payout ratio of some 23%.

In a May 23 report, Kenanga Research analyst Desmond Chong said his positive conviction is reaffirmed by the group’s superior earnings prospects as well as management’s strategic planning and vision.

“While the recent one-for-one bonus issue would be the sweetener, further capacity upscaling post Campus 2.0 completion is also a rerating catalyst,” he highlighted.

Campus 2.0, which is located at Batu Kawan Industrial Park, is slated for completion by October to November this year. Recall that the land size of 960,000 sq ft, with a built-up of 450,000 sq ft, could house four times the current capacity.

“Challenges include the limited talent to support such volume growth in the short term, we applauded the group’s vision and efforts, which focus on growth and the perspective of constant new areas [of] exploration amid [a] comprehensive product road map and strategic customer engagement,” he said.

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