VicPlas Int'l

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Pipes Dream

The company was started in 1993 and listed in SGX in 1999. The two core businesses are: 

  • Manufacture and distribute plastic building products through Vicplas Holding Pte Ltd and Rumples Industries Sdn Bhd.  Products include uPVC pipes, fittings and electrical conduits for

    • Waste & portable water systems​

    • Underground electrical & building piping systems

    • Data & signal ine piping for telecom companies.

  • Develop, manufacture sterile & non-sterile medical devices through subsidiaries 

    • Forefront Medical Technology (Pte) Ltd,

    • Forefront Medical Investment Pte Ltd and

    • Forefront Medical Technology (Jiangsu) Co. China

Majority of the firm business are currently from Singapore. 

Financial - FYJul21

Revenue grew 28% to $114M. Gross margin held steady at 17.4% after trending lower from FY15 peak of 26.5%. Together with improved Other Income from tooling business from Medical customers. Net profit grew 109% from $5.0M to $10.4M between FY20 & FY21. 

Note: High Other Income of $6.9M explain why NM is higher than OM. 

Segments

Pipes & Fittings was the key reason for the sharp decline in margin; reducing from 25.2% in FY16 to 9.4% in FY20 & FY21. 

From FY19, the company successful turnaround Medical Devices segment. Margin gradually grew to 15.1% in FY21. 

To grow Medical devices segment, VicPlas is investing in capabilities like in-vitro diagnostics, medical extrusions and electro-mechanical devices. 

Expanding manufacturing capacity in Changzhou, China and possible establishment of a fifth site 'near USA' will help provide the foundation for future growth. 

Opinion

1HJan22 results is showing signs of margin weakness despite revenue growing 12% YoY. This is due to rising electrical, material & labour cost, supply chain disruption and start-up cost for Changzhou plant expansion. If these issues continue to persist, 2HJul22 financial performance may face some degree of headwind. 

Productivity & gross margin improvement will determine whether VicPlas could sustain earning growth in the long term.