Valuetronics

Valuetronics: Company reported its 3Q13 results this morning. Revenue from continuing operations fell 16.3% y/y to HK$508.1m, or 10.5% below OCBC's forecast. Profit from continuing operations dipped 41.8% y/y to HK$25.6m Company continued to incur operating losses (HK$1.1m) from its Licensing division, but this was a significant reduction from 2Q13 (HK$31m) which includes HK$28m worth of one-off termination expenditure and impairment charges given its decision to cease operations of the division. OCBC expect Company's outlook to remain challenging, as margin pressure from rising labour costs and slower growth from its largest customer are likely to weigh at least in the near term. OCBC maintains a HOLD rating but TP of $0.20 is currently under review.