Analysts neutral on VSI’ move to increase investment in UKlisted firm

KUCHING: VS Industry Bhd’s ( VSI) move to increase its investment in UK- listed Seeing Machines garnered neutral views from analysts.

In a report, the research arm of AmInvestment Bank Bhd ( AmInvestment) said: “The investment is being treated as a financial asset on the group’s balance sheet. We are neutral on this development.”

Of note, VSI, through its wholly-owned V.S International Venture, subscribed 70.2 million new shares in Seeing Machines in order to maintain its current shareholding of 11.7 per cent.

The total consideration of the exercise is 3.5 million pound (RM19.3 million), and would be funded by internally generated funds.

“As of October 31, 2017, the group had a cash position of RM370 million, and a net gearing of 19.7 per cent. Subsequent to the exercise, net gearing will increase marginally to 21.1 per cent,” the research team said.

The investment in Seeing Machines dated back to March 22, 2016, when VSI invested circa RM39.4 million for a 12.1 per cent stake in Seeing Machines during the company’s capital raising exercise.

Seeing Machines is a UK-listed developer of computer vision algorithms, processors and systems that enable machines to analyse the cognitive state of humans. Its primary product to date is driver monitoring systems, which are capable of detecting drivers’ drowsiness or distraction through precision eye-tracking. The application aims to reduce road accidents, protect freights and save lives.

Overall, AmInvestment maintained a ‘buy’ call on the stock.

It explained, “We continue to like VSI due to its association with Customer X, who plans a slate of new product launches over the next few years, its ability to offer turnkey electronic manufacturing services ( EMS) solutions being a vertically integrated player, and its handsome growth prospects from FY18 to FY20 forecast, underpinned by sustainable capacity expansions.”