Stock With Momentum: V.S. Industry

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This article first appeared in The Edge Financial Daily, on September 23, 2015.

V.S. Industry Bhd (-ve)

VS Industries (Fundamental: 1.3/3, Valuation: 1.7/3) triggered our momentum algorithm yesterday, rising 3.6% to close at a 1-year high of RM1.43. Its share price has been trending up since January, gaining some 198% year-to-date.

An electronic manufacturing services (EMS) provider, VS mainly manufactures electrical and electronic products for multinational corporations from the US, UK, Europe and Japan. Key products include single-cup coffee brewers, high-end vacuum cleaners and automotive components. Export accounted for some 67% of sales in 2014.

For 9MFYJul2015, net profit surged more than four-fold to RM80.0 million on the back of a 21.1% growth in revenue, due to higher sales and better sales mix from its Malaysian operations, as well as forex gains of RM13.2 million. Gearing stood at 28.8%, down from 55.1% in FY2013.

The company completed a 1-to-5 share split last Monday — it now has 1.15 billion shares outstanding.

It trades at a trailing 12-month P/E of 13.7 times and 2.5 times book.