FY2016 Results Briefing

26 May 2016 1

Important Notice

2

This presentation contains forward-looking statements which can be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. Such statements may include comments on industry, business or market trends, projections, forecasts, and plans and objectives of management for future operations and operating and financial performance, as well as any related assumptions. Readers of this presentation should understand that these statements are not historical facts or guarantees of future performance but instead represent only the Company’s belief at the time the statements were made regarding future events, which are subject to significant risks, uncertainties and other factors, many of which are outside of the Company’s control. Actual results and outcomes may differ materially from what is expressed or implied in such forward-looking statements. The Company cautions readers not to place undue reliance on any forward-looking statements included in this presentation, which speak only as of the date made; and should any of the events anticipated by the forward-looking statements transpire or occur, the Company makes no assurances on what benefits, if any, the Company will derive therefrom.

Ms. Chan Hui Si huisi@cogentcomms.com

Mr. Gerald Woon woon@cogentcomms.com

Tel: + 65 6704 9288

Agenda

• About Valuetronics

• FY2016 Financial Highlights

• Business Outlook

• Questions & Answers

3

About Valuetronics - Corporate Profile

4

At a Glance

• Electronic Manufacturing Services (“EMS”) provider established in 1992 in Hong Kong

• Listed on Main Board of SGX on 28 March 2007

• Production facilities in Daya Bay & Danshui Town, Guangdong, PRC (60 minutes from Shenzhen)

Integrated EMS Provider

• Engineering Design & Development

• Plastic Injection Moulding

• Tool Design and Tool Fabrication

• Metal Stamping & Machining

• Printed Circuit Box Assembly

• Box Build Assembly

• Supply Chain Management

Accreditations

• ISO9001:2000, TL9000, ISO14001:1996 &

ISO13485; TS16949

Employees • As at 31 Mar 2016 around 4,000

Bloomberg Code VALUE.SP

Reuters Code VLUE.SI

ISIN Code BN2

Issued shares (M) 380

Mkt cap (SG$M) (19 May 2016) 182.4

Share price (SG cent) (19 May 2016) 48.0

Avg volume 3-mth ('000) 640

52 wk range (SG $) 0.35 – 0.53

25.8%

69.1%

5.1% Shareholding

Executive Directors

Public Float

HSBC Global Investment Funds

Business Model

5

A Premier Design and Manufacturing Partner

Proactive deployment of Design & Development capabilities

Integrated Manufacturing Services

•SMT •Wire bonding •FG assembly •Metal part machining • Injection molding •Tool design & fabrication

Engaging in customers value chain

•Design for manufacturing •Design & build test fixtures •Rapid prototyping •Regulatory compliances •Supply chain management Services

Design & Development

•Mechanical & electrical engineering design from concept to mass production •Better manufacturability with enhanced features & lower cost •Software development • Industrial design

Value Add

Key Milestones

6

1992 2002 2003 2005 2007

Headquartered in Hong Kong with manufacturing

facilities in Danshui Town, PRC

Use of ROHS equipment and accredited with

TL9000

Adopted work cell management &

updated to ISO9001:2000

Became preferred supplier of a Dutch

MNC for its consumer lifestyle

segment

Listed on SGX-Mainboard & Commenced

construction for Daya Bay Facility

2008 2008 2009 2012 2015

Became preferred supplier of a Dutch MNC for its Lighting

segment

Completed Phase 1 construction of

Daya Bay Facility

Opened Daya Bay Facility

Acquired medical business

Celebrated 20th anniversary with revenue crossing

HK$2 Billion

Accredited with TS16949 quality

management system

Bird’s-eye View - DYB Facility

7

• Land use rights acquired in 2006

• Total site area > 110,000 sq m

Customer & Product Portfolio

• Ability to accommodate customers requirement for various

volume, mix and complexity

• Customer base ranges from emerging enterprises in North America

(low-volume complex custom product) to top global MNCs (high-

volume standards product)

8

Industrial & Commercial Electronics

Consumer Electronics

Industrial & Commercial Electronics

9

Transaction Printer for Slot, POS & Teller Station Machines

Thermal Label Printer for Industrial & Commercial Use

Printers Temperature Sensing Devices

Cold Chain Temperature Monitor for Industrial & Commercial Use

Electronic Thermostats

Nasdaq-listed Company Unit of a NYSE-listed MNC

Global Brand owned by NYSE-listed MNC Company owned by a UK PE Fund

Industrial & Commercial Electronics (Cont’d)

10

Taiwan-listed Company

Taiwan’s No.1 Business Communications Maker

Toronto-listed Company

High Precision GPS for Industrial Use

Communication Products

Company Based in North America

Industrial & Commercial Electronics (Cont’d)

11

Access Card Readers

Others

In-vitro Diagnostic Medical Equipment for Testing Human Tissue Samples

Electronic products for Automotive industry

Tier 1 Automotive System Manufacturer

Data and media connectivity module

Unit of a STO-listed MNC

Consumer Electronics

12

15W and 40W Bug Zappers

(Subsidiary of Homax Group, wholly owned by PE firm)

PCBA for Shavers & Electric Toothbrushes for Consumer Use

Consumer Lifestyle Division of a Dutch MNC (Listed in Amsterdam & New York)

FY2016 Financial Highlights

13

Financial Highlights

HK$’M FY16 FY15 % Change

Revenue 1,952.9 2,429.3 (19.6)

Gross Profit 297.5 331.4 (10.2)

Gross Profit Margin 15.2% 13.6% 1.6% pt

Net Profit for the year 120.4 149.2 (19.3)

Net Profit Margin 6.2% 6.1%

0.1% pt

14

Revenue Contribution

15

42.2%

57.8%

FY16

Consumer Electronics (“CE”)

Industrial and Commercial Electronics (“ICE”)

HK$1,128.3M

HK$824.6M

60.6%

39.4%

FY15

HK$956.3M

HK$1,473.0M

Revenue Trend

16

1,263.7

1,683.6 1,581.4 1,653.3 1,473.0

824.6

673.3

604.7 628.8

780.0 956.3

1,128.3

-

500.0

1,000.0

1,500.0

2,000.0

2,500.0

FY11 FY12 FY13 FY14 FY15 FY16

Consumer Electronics Industrial & Commercial Electronics

2,433.3

HK$’ M

1,937.0

2,288.3 2,210.2

2,429.3

1,952.9

Quarterly Revenue

17

382.7 383.9 402.4 361.2 325.5

280.2 239.0

141.0 164.4

230.6 242.7 225.2 235.0

253.4 269.8

287.5

293.5 277.5

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16

Consumer Electronics Industrial & Commercial Electronics

578.9 613.3 626.6 627.6

596.2 550.0

526.5

434.5 441.9

HK$’ M

Revenue by Shipment Destination

44.7% 53.9% 54.2%

37.6%

34.3% 37.3%

17.7% 11.8% 8.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY14 FY15 FY16

Europe

China & Asia Pacific

North America

18

Gross Profit & Net Profit Trend

80.3 82.0 83.7 85.4

78.5 77.0 70.5 71.5

33.9 36.3 39.2

39.8

33.5 32.2

25.2 29.5

12.8% 13.1% 14.0%

14.8% 14.3%

14.6%

16.2% 16.2%

5.4% 5.8% 6.6%

6.9% 6.1% 6.1%

5.8% 6.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

0

10

20

30

40

50

60

70

80

90

Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16

Gross Profit Net Profit GP% Net Profit Margin 19

Market Capitalisation & Net Cash Balance

32

3.5

37

0.3

47

6.2

56

8.4

59

2.2

72

6.6

80

8.5

85

7.3

15

3.5

13

9.9

98

.2

24

3.7

22

1.6

47

7.9

50

5.8

13

5.8

32

2.2

50

0.5

51

1.4

47

9.3

74

0.3

99

2.7

98

1.7

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1000.0

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

NAV Net Cash balance Market Capitalization

68

9.3

HK’M

20

Earnings Per Share & Dividends Per Share

21

25

.5

15

.0

16

.7

34

.2

36

.5

21

.9

40

.6

40

.0

31

.9

7.8

4.5

7.0

14

.0 17

.0

8.0

20

.0

20

.0

20

.0

6.1%

11.8%

7.7%

9.8%

11.9%

6.0%

9.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

EPS Dividend per share Dividend Yield

7.5% 7.7%

We are committed to formal dividend policy of 30-50% payout ratio

HK cents

Yield

Share Price

S$0.230 S$0.075 S$0.165 S$0.235 S$0.230 S$0.205 S$0.330 S$0.47 S$0.45

Dividend payout

ratio 30.1% 30.0% 41.9% 40.9% 46.6% 36.5% 49.3% 50.0% 63.0%

Summary of Cash Flows

22

HK$’000 FY16 FY15

Operating Activities

Net cash generated from operating activities 289,273 176,576

Investing Activities

Net cash used in investing activities (34,127) (80,201)

Financing Activities

Net cash used in financing activities (72,044) (67,345)

Net increase in cash and cash equivalents 183,102 29,030

Effect of foreign exchange rate changes 311 (1,117)

Cash and Cash equivalents

At beginning of the year 505,847 477,934

At end of the year 689,260 505,847

Balance Sheet & Key Ratios

23

HK$’M FY16 FY15

Working capital

Inventories 198.7 221.9

Trade Receivables 343.2 517.0

Trade Payables (286.2) (347.4)

255.7 391.5

Net Current Assets 605.5 558.6

Net Cash 689.3 505.8

Net Assets 857.3 808.5

Turnover Days FY16 FY15

Inventory 43.8 38.6

Trade Receivables 64.1 77.7

Trade Payables (63.1) (60.4)

44.8 55.9

Key Financial Ratios

24

# Share price as at respective year end date SGD/HKD Ex rate: FY16: 5.74; FY15: 5.64

FY16

FY15

Price (SGD) # 0.45 0.47

NAV per share (SGD) 0.39 0.38

Cash per share (SGD) 0.32 0.24

Cash to Mkt Cap ratio 70% 51%

FY16

FY15

Current ratio 1.9 1.8

ROE 14.0% 18.5%

ROA 8.0% 9.8%

PB ratio 1.14 1.23

Business Outlook

25

Business Review

26

Overview

• Significant growth in ICE mitigated the decline in CE revenue

• Overall GP% improved due to increased weightage ICE

• Healthy working capital, operating activities generated substantial cash flow, notwithstanding the decline in revenue

CE

• Completely moved out of the low-margin mass market LED light bulbs business after years of aggressive pricing competition & margin erosion

• CE revenue in the second half of FY2016 comprised predominantly products with consumer applications for a portfolio of customers

ICE

• ICE segment continued to deliver solid growth, 3rd consecutive year of double digit growth

• Accredited with the TS16949 standard - prerequisite for participating supply chain of automotive industry

• Acquired its first customer in the automotive industry, one of the world's largest tier-1 automotive system manufacturers with a global footprint, to supply data and media connectivity modules

Business Review

27

Outlook

• Well positioned to ride on the rise of in-car connectivity as automobile manufacturers respond quickly to consumers’ increasing desire to integrate their smartphones and tablets with their vehicles

• In common with most manufacturers, we are operating in an uncertain macro-economic environment. We remain mindful on the impact on our overall business which may result from a stronger US dollar and a further slowdown in China’s economy

Questions & Answers

28