SINGAPORE: Investors should expect to see a sequential increase in Valuetronics’ (VALUE) revenue due to significant contribution from new consumer electronics (CE) projects, said KGI securities
It notes that this was precisely what they observed in 2Q17’s results, which was slightly better than expected. Thanks to strong contribution from new consumer electronics projects.
The net QoQ rise in total revenue could be attributable to the CE segment (HK$261m; +9.2% YoY, +58% QoQ). As a result of this change in sales mix, gross margin declined QoQ to 14.6% from 16.0%. This should be expected as CE margins tend to be lower in general. Therefore, investors should not be alarmed to see this.
CE’s sequentiaal growth came from three sources. 1) A new generation smart lighting product, 2) a new household sanitary product (that now incorporates electronic parts) from a new customer, and the underlying organic growth of its PCBA products.
The largest contributor of the three came from smart lighting. This smart lighting product can be wirelessly connected to a hub, and users are able to remotely control lighting features such as colour, intensity, etc. via their phones.
These smart lighting products are marketed and sold by a large Dutch MNC. Gross margin for this line of products is expected to be similar to past LED lighting products, however the absolute gross profit amount should be much higher given its much higher retail price than the traditional LED lighting products.
