On Sept 10, its shares plunged nearly 19%, and year to date the share price has plummeted 49%.
However, RHB Research said all is not lost for Johor-based VSI, which is “fundamentally still largely sound”.
“We believe the recent share selldown has more than priced in the forthcoming (Q4 FY2025) results disappointment,” it said in a note today.
The research house maintained its “buy” call on the counter but lowered its target price to 78 sen from 99 sen previously.
It also cut its forecast on VSI’s FY2025F-2027F earnings by 39%, 18% and 23%.
RHB said its previous forecasts on expectations of a strong volume ramp-up in Q4 FY2025 may not play out, considering the uncertainties on the US tariffs during the quarter before the final decision on Aug 1.
“Notwithstanding the uncertainties and challenges from the US tariff policy, we believe the current depressed valuation has undervalued VSI.
“In the longer run, Malaysian (EMS) players could benefit structurally from sustainable job flows, given the tariff differential versus China.”
Business picking up
RHB said its checks with the management suggest no loss of key customers or major change to business fundamentals.
“Instead, we learnt that volumes are picking up, spurred by the favourable year-end seasonality and new product launches by key customers,” it added.
It said VSI could also secure new orders as more brand owners look to diversify their production sources in reaction to the US tariff move. Meanwhile, the startup of its Philippines operations is “well on track”.
RHB said VSI is scheduled to release its Q4 FY2025 results on Sept 30.
For Q3 FY2025, net profit tumbled 56.3% from a year earlier to RM23.77 million, while revenue fell 10% to RM909.42 million. Net profit for the first nine months fell by more than 41% year-on-year to RM69.75 million.
VSI attributed the weaker earnings to lower orders from customers, higher operating expenses and unfavourable foreign exchange rates. The drop came amid tariff measures from the US, a key market for the group.
Its major shareholders – executive chairman and largest shareholder Beh Kim Ling and his son and executive director Beh Chern Wei – have been paring down their stakes during the recent selldown.
They have been disposing their shares in a series of transactions since Aug 25, reducing their direct holdings to 4.97% and 2.96% respectively by mid-September.
VSI closed 4.8% or three sen lower at 59 sen, valuing the group at RM2.31 billion.