• The broker’s confidence follows a stronger-than-expected 1HFY27.The key growth engine was Industrial and Commercial Electronics (ICE), whose revenue surged 18.6% to HK$837.9 million and now makes up more than 93% of group revenue.
• Read excerpts of its report below ..... |
Excerpts from UOB Kay Hian report
Analysts: John Cheong & Shaina Mahtani
Valuetronics (VALUE SP) 1HFY27: Dividend Up 75%; ICE Drives Growth
• 1HFY27 revenue of HK$897.3m (+7.3% yoy) and PATMI of HK$89.8m (- 3.5% yoy) are ahead of the run-rate, representing 53.8% and 56.1% of our FY27 forecasts respectively.
• Interim dividends surged 75% yoy to 14 HK cents/share, while ICE revenue grew 18.6% yoy to HK$837.9m. |
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Analysis
| Revenue and PATMI ahead of run-rate |
• Revenue rose 7.3% yoy to HK$897.3m, driven by higher contributions from ICE's network access solutions and captioned phone customers.
Reported PATMI declined 3.5% yoy to HK$89.8m, weighed down by higher component costs and increased taxes following changes to tax incentives in Vietnam.
Revenue and PATMI accounted for 53.8% and 56.1% of our FY27 forecasts respectively.
PBT grew 1.3% yoy to HK$106.3m despite a 1.0ppt decline in gross profit margin to 18.7% amid semiconductor supply constraints. Excluding discontinued GPU cloud operations, net profit declined 2.2% yoy to HK$95.9m.
• Interim dividend jumps 75% to 14 HK cents/share. Management declared an ordinary interim dividend of 8 HK cents/share (1HFY26: 4 HK cents) and a special interim dividend of 6 HK cents/share (1HFY26: 4 HK cents), bringing total interim dividends to 14 HK cents/share (+75% yoy).
This represents a payout ratio of approximately 59.8%, in line with its revised dividend policy of 50-70% of net profit, reinforcing management's commitment to enhancing shareholder returns through its HK$300m capital return programme.
| ICE segment continues to drive revenue growth |
•ICE revenue grew 18.6% yoy to HK$837.9m, supported by strong demand from network access and captioned phone customers, accounting for 93.4% of total revenue (1HFY26: 84.5%).
This offset a 54.3% decline in Consumer electronics (CE) revenue to HK$59.4m following the phase-out of traditional consumer lifestyle products.
Management expects ICE growth to continue in FY27, while CE revenue is expected to decline despite new project wins.
Automotive opportunities remain longer-term growth drivers given lengthy qualification cycles.
• HK$300m capital return programme supported by strong net cash. VALUE paid HK$65.7m in FY26 special dividends in August and declared a further HK$24.5m special interim dividend for 1HFY27. 
John Cheong, analystThe group has also utilised HK$31.4m to repurchase 5.1m shares, representing 39% of its HK$80m FY27 buyback allocation.
Net cash remained strong at HK$1.15b with no bank borrowings, while operating cash flow stood at HK$76.3m against capex of HK$18.4m.
We expect continued execution of the FY27-28 capital return programme to enhance shareholder returns, supported by its strong balance sheet while allowing for future growth.
| GPU disposal remains ongoing following Trio AI cessation |
• Following the cessation of Trio AI's operations in Aug 26, VALUE recorded a HK$6.1m loss from discontinued operations, mainly attributable to depreciation of GPU servers and related hardware.
Approximately HK$127.5m of GPU-related assets have been classified as held for sale, with management currently engaging potential buyers to recover value from these assets.
A sale could release additional cash, although the timing and proceeds remain uncertain.
Earnings Revision/Risk
• We maintain our earnings estimates. Key risks are component costs and trade policies.
• Maintain BUY with a 25% lower target price of S$1.40, pegged to 16x FY28F ex-cash PE (+1SD above mean), with 50% discount ascribed to cash.
This is lowered from 19x PE (+2SD above mean) previously to account for general sector derating in the tech sector. |
 See also: AI Selloff Sparks Singapore Weakness — UOB KH Sees Bargains Emerging |
