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$VS / 6963 (V.S. INDUSTRY BERHAD)

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VS 2QFY25 briefing keytakes

Date: 26 Mar 2025

Management: CS Chong (CFO), CS Ng (GM)

Key takeaways:

- 2QFY25 revenue: Softer qoq revenue due to order sesasonality and lower demand from key customer in MY and IND. 1HFY25 performance impacted by lower demand and forex fluctuations
- Revenue contribution: Back then customer Y contributed RM170m in 1HFY24, but now with the absence of it alongside orders decline in customer B in US. Customer K – maintain. Customer X contribution is up RM700m in 1HFY24, and now c.RM900m in 1HFY25.
- NP Larger than proportionate Qoq decline stemming from lower economies of scale. Affected by forex in 1QFY25 resulted in higher costs. HT Press dragging the performance from e-cigg segment.
- Without customer Y, started LSR operation – contributed RM80m revenue in 1HFY25 (for internal and external consumption)
- Declared 2nd interim DPS of 0.4sen to YTD 0.8sen.
- Inventory reduced from RM800m to RM400m, hence CF operation

Updates on customer

- MY: X, K, Z, and SG – B.
- Z + F = flat or slightly lower.
- Updates from Indonesia: Undergone inventory adjustment in 4QCY24, to gradually pick up. Orders from other customers to be healthy. Expects FY25 performance to be satisfactory. Exploring new opportunities.
- US based customer – inventory adjustment to persist up to 3QFY25 and expect orders to gradually pick up. Secured new models and target to start production in 2HCY25. Production for new models started in Mar. 2HFY25 was bad. PBT at RM18m, now -RM9m
- Coffee brewer customer – existing orders to remain healthy, new model in the pipeline for end of 3Q.
- Pool cleaning customer – orders remain relatively stable. Projection, initially RM400m, lower than that now.
- Customer X – demand outlook continues to be healthy. 2 new models secured have since started production in 1QCY25. Secured new models. Value chain enhancement – 1st project (LSR) is running well and continue to supply internally and externally. 2nd project (dipping) contributing positively, 3rd project (blistering) to commence soon. 4th project (tubing) to commence in tandem with new models secured (FC).
- Philippines – renovation is competed and installation of machines to be concluded soon. Test run and mass pro to start in 2QCY25. Secured 2 models and bidding for more models. Enjoying zero tax exemption for 5 years.

New Biz development

- Slight delayed to PH market due to labour.
- In PH, Captain america (BT), SOP in May25, FY25 revenue RM7.2m, FY26 revenue of RM345.6m.
- In PH, Spiderman (new model of BT), delayed for 1 year, SOP in Feb26, no contribution in FY25, FY26 at RM120m. Hence totalling RM7.2m in FY25 and FY26 revenue of RM466m. Previously RM1b guidance in FY26, now only RM500m.
- MY: Confirmed new models secured in MY, besides fan. Secured 4 more new models. Env Batman and Hulk (SoP May and July).
- Batman (Env), SoP May25, at RM2.6m in FY25 and RM39.5m in FY26m.
- Hulk (Env), SoP July25, FY25 none, FY26 RM69.7m.
- PCBA revenue was at RM80m, now RM30m, PBT last time 15m, now 3m.
- Wonder woman (BT), SOP date Jun25, RM11.5m in FY25, FY26 revenue at RM280m. By Chinese market
- Ironman (FC), SoP date Aug25, no contribution in FY25, FY26 RM420m.
- All in for Batman, Hulk, Wonder woman, Ironman contribute RM14.1m in Fy25 and FY26 at RM809.2m.

Q&A

- 3QFY25 revenue will be impacted by tariff decision, and 4Q will normalise. Should be better qoq but lower YoY. Lower from customer X as well, but ramping up again in 4Q
- FY25: X: initially RM1.85b to now RM1.65m, B initial RM900m to now RM650m at best best, K maintain at RM650m, Z initially RM400m to now RM350m. Indonesia RM350m, other RM300m. All in RM4.1b.
- FY26: revenue to be at least RM5b revenue.
- LSR contribution will come in from FC and BT. Blistering from FC, Tubing from FC.
- Philippines bluesky can do RM2b revenue.
- Worry that if MY tariff is higher than the rest then it will be have impact to the whole landscape.
- Tariff impact – can only wait and see.
- Tariff is based on import date, not production date.
- NPM for accessories >10%. LSR targeting revenue of RM150m in FY25, and >RM200m in FY26, but on console basis.
- At RM400m contribution revenue from PH, it will be profitable.
- Rental RM800k/month from PH.
- Gestation period will be longer in PH, probably more than 3 months.
- Indonesia: Depending on this power meter customer – slight drop in 2Q.
- One more FC model in bidding for MY.
- Mexico – only taken Captain America.
- Announcement: From KPMG from PWC – auditor, wef this year.
- Medical – clean room for PCBA.

Thanks.