RHB Investment Bank Bhd (RHB Research) and Maybank Investment Bank Bhd (Maybank IB) have maintained their BUY ratings on VS Industry Bhd, citing its medium-term growth prospects despite a weak start to the 2025 financial year. RHB Research upheld its target price of RM1.39, reflecting a 31% upside, while Maybank IB retained its projection at RM1.28, suggesting a 23% potential gain. Analysts noted that the company is set to benefit from new job orders, an expanding customer base, and improving operations in key regions.

VS Industry reported a net profit of RM31 million for the first quarter of FY2025, a 38% decline year-on-year, as revenue fell 4% to RM1.1 billion. RHB Research attributed the weaker results to significant forex challenges caused by the sharp depreciation of the US$, which eroded margins and contributed to the lower profitability. Maybank IB highlighted the impact of reduced sales from key customers, higher labour costs, and forex fluctuations, as the ringgit strengthened from RM4.70 to RM4.10 against the US$.

Despite the near-term challenges, analysts emphasised the company's positive outlook. RHB Research noted that the restructuring of operations under a key client, Customer X, has opened new opportunities for VS Industry. The client's reorganisation has allowed the company to secure two new product models, with production expected to begin by March 2025. Meanwhile, Maybank IB pointed out that the company's expansion into the Philippines, with production slated to start in the first quarter of calendar year 2025, underscores its readiness to meet growing demand.

Both research houses also acknowledged the contributions from VS Industry's operations in Indonesia, which reported a 50% year-on-year increase in revenue for the quarter. The turnaround in profitability in the Indonesian division partially offset the weaker performance in Malaysia, where profit before tax fell 43% due to softer sales and rising costs.

Looking ahead, the company is focusing on value chain enhancements and operational streamlining to support margin recovery. RHB highlighted the RM1.2 billion worth of orders already in hand, with expectations of additional contract wins in the first quarter of calendar year 2025. Maybank IB added that talks with a prospective customer could conclude by year-end, potentially providing another earnings boost.