Valuetronics

Valuetronics: 2QFYMar14 net profit jumped more than 10x to HK$39.6m, due to an increase in demand from some of its Industrial and Commercial Electronics (ICE) customers and Consumer Electronics (CE) customers as well as no further expenditure having been incurred for its Licensing business (2QFY13 net loss of HK$31.2m), which was terminated in the previous financial year. Revenue increased by 6% to a record high HK$632.0m, and gross margin improved from 12.1% to 13.3%, reflecting the change in product sales mix. Mgt expects the group to achieve growth in profitability for FYMar14, notwithstanding that business conditions remain challenging due to rising wages and costs in the PRC. Balance sheet remains firm, backed by $0.127 cash per share (no debt), representing 60% of share price. At the last close of $0.215, the stock trades at a mere 3.3x P/E, 0.8x P/B.