VSTECS (856) H1 2024 earnings summary

Executive summary

• 2023 revenue reached HK$73.9 billion, with gross profit of HK$3.5 billion and net profit of HK$922 million; EPS was HK$0.6562 and ROE was 11.7%.

• For the six months ended 30 June 2024, revenue rose 17.8% year-over-year to HK$40.08 billion, with net profit attributable to equity shareholders at HK$453.3 million and EPS at HK32.57 cents.

• Gross margin for the interim period declined to 4.43% from 5.27% year-over-year.

• Business spans cloud computing, consumer electronics, and enterprise systems, with strong market positions in each.

• Maintains strategic partnerships with major global tech brands and is the largest IT distributor in Southeast Asia.

Financial highlights

• Net debt to total assets ratio was 0.17 as of 30 June 2024 (0.14 at 31 December 2023), indicating a healthy balance sheet.

• Cash and bank balances as of 30 June 2024 were HK$3.69 billion; total borrowings rose to HK$9.55 billion.

• Inventory days: 49; receivable days: 70; payable days: 66; working capital days: 53 as of 30 June 2024.

• Average annual revenue growth since listing: 24%; average net profit growth: 29%.

• No interim dividend was declared for the period; final dividend of HK25.7 cents per share for the previous year was paid/approved.

Outlook and guidance

• Expects double-digit growth in 2024, with 10% revenue and profit growth in the first two months.

• The group aims to expand market share and product/service offerings, leveraging its broad portfolio and network for continued growth.

• Consumer electronics segment expected to rebound, driven by AI-based PCs and replacement cycles.

• AI servers projected to see strong growth; overall growth target is conservative due to macroeconomic uncertainty.

• No ambitious targets set due to global economic headwinds; aims for at least flat growth.