KUALA LUMPUR: VS Industry Bhd is expected to have better earnings in the coming quarters from the ramp-up of their utilisation rate as the labour shortage has been remedied.
Hong Leong Investment Bank Bhd (HLIB) Research said the majority of the allocated quota of 3,700 foreign workers had come in and this will help VS Industry to ramp-up its utilisation rate.
Subsequently, the firm expects the utilisation rate for VS Industry's i-Park Senai Airport City facility to pick up steadily and it reckons that this could be one of the biggest revenue contributors once the production starts to ramp-up fully.
"At this juncture, we gather that supply chain and logistics issues are manageable as the group stocked up on certain raw materials with longer lead time.
"Additionally, prospects remain intact with several discussions taking place with new customers to contribute positively to future earnings," it said.
HLIB said VS Industry's financial year 2022 (FY22) core net profit of RM200.8 million had come in above expectations.
The firm said this had beat expectations at 108 per cent and 107 per cent of its and consensus forecasts respectively.
"The outperformance was attributable to higher-than-expected core earnings before interest, taxes, depreciation and amortisation (ebitda) margin.
"We reaffirm Buy, with unchanged target price of RM1.14 on VS Industry.
"As the biggest electronics manufacturing services (EMS) player in Malaysia with a solid track record, we opine that VS Industry would be able to weather through the gloomy clouds while simultaneously scouring for opportunities from the trade diversion," it added.