VicPlas Int'l
Pipes Dream
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The company was started in 1993 and listed in SGX in 1999. The two core businesses are:
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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
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Waste & portable water systems​
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Underground electrical & building piping systems
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Data & signal ine piping for telecom companies.
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Develop, manufacture sterile & non-sterile medical devices through subsidiaries
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Forefront Medical Technology (Pte) Ltd,
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Forefront Medical Investment Pte Ltd and
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Forefront Medical Technology (Jiangsu) Co. China
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Majority of the firm business are currently from Singapore.
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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.
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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.
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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.
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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.
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Productivity & gross margin improvement will determine whether VicPlas could sustain earning growth in the long term.