V.S. International Group Limited

Five-year summary (USD, company-restated)

Source: AR25 Financial Highlights. Fiscal years end 31 Jul for FY2021–FY2023; FP2024 is the 17 months to 31 Dec 2024; FY2025 ends 31 Dec 2025. Net debt is shown as negative when the Group is in net cash.

Income statement as originally reported in RMB (pre-USD restatement)

Sources: AN22 (FY2021, FY2022), PW23 and AN17M comparatives (FY2023), AN17M (FP2024). FY2025 was not reported in RMB.

Additional RMB data points that do not fill a full row:

• FY2021 gross profit was RMB54.31m (21.20% margin).

• Operating loss was RMB3.93m in FY2021 and RMB49.28m in FY2022.

• FY2023 gross profit was RMB11.51m (15.1%).

• FP2024 gross profit was RMB34.48m, and FP2024 included a bargain-purchase gain of RMB47.48m.

• FY2022 gross profit: not captured in sources reviewed.

• Loss per share was RMB0.97 cents in FY2023 and RMB0.68 cents in FP2024.

Sources: AN22, AN17M.

Detailed income statement: FP2024 to TTM June 2026

Sources: AN25 (FP2024 restated, FY2025), IR26 (H1 2025 restated, H1 2026). TTM is FY2025 minus H1 2025 plus H1 2026 (analyst computation). EBITDA is analyst-computed as operating profit plus depreciation of PPE and right-of-use assets.

EPS and dividends

Sources: AN25 note 7; IR26 note 7. Diluted equals basic because there are no dilutive instruments. MS reports FY2025 EPS as USD0.000029, which is inconsistent with the Company's USD0.02 cents (USD0.0002) and appears to be a data error. No dividend was declared for FY2021–FY2025 or H1 2026 (AN25 note 6; IR26 note 6; AN22).

Margins

FP2024 EBITDA is flattered by the USD6.655m bargain-purchase gain and depressed by USD2.90m of PPE/right-of-use impairments booked in other losses and USD1.87m of financial-asset impairment. Excluding the bargain gain and the PPE/ROU impairments, FP2024 EBITDA would have been about USD-2.04m (analyst computation).

Revenue CAGR. USD revenue rose from USD39.03m (FY2021, July year-end) to USD64.11m (FY2025, December year-end), a span of about 4.4 years. That implies a CAGR of about 11.9%. The figure is entirely inorganic: it reflects consolidation of VS Vietnam from 16 Jul 2024, which followed a 72% collapse in legacy China revenue between FY2021 and FY2023. Organic growth is visible only from H1 2026, at +11.4%.

Balance sheet

Sources: AN25 (1 Aug 2023 restated, 31 Dec 2024, 31 Dec 2025), IR26 (30 Jun 2026). Total debt includes bank borrowings, lease liabilities and loans from a director.

Commentary.

Balance-sheet step-change: Total assets jumped from USD46.7m to USD121.9m between August 2023 and December 2024. Owners' equity rose by USD31.8m, and "other reserves" swung from a USD20.9m deficit to a USD9.0m surplus. Investment properties of USD63.4m appeared where none existed at 1 Aug 2023, alongside USD11.4m of new deferred tax liabilities.

Analytical inference (not confirmed by the filings reviewed): The pattern is consistent with Zhuhai land and buildings formerly held as PPE/land-use rights being transferred to investment property at fair value, with a revaluation surplus taken to reserves. Together with the VS Vietnam consolidation, the bargain-purchase gain and the consideration-share issue, this transformed the balance sheet.

No goodwill: None is carried, because the VS Vietnam acquisition produced a bargain purchase.

Liquidity: The Group returned to net cash of USD2.28m at December 2025 and USD2.45m at June 2026. Director loans (from the Beh family) were largely repaid, falling from USD3.99m to USD0.73m. Debt is overwhelmingly short-term: 96.25% falls due within one year (IR26). It is denominated mostly in USD (82.17%), with VND (9.98%) and HK$ (7.85%).

Secured facilities: Banking facilities total USD18.30m. They are secured on restricted cash, a building (NBV USD5.91m), PPE/ROU (USD4.35m) and land-use rights (USD0.36m) (IR26).

Cash flow

Sources: FinancialFilings key figures (FY2024, from AN24); AR25 (capex).

Indirect evidence suggests positive cash generation in FY2025:

• cash and restricted balances rose USD1.53m to USD10.83m;

• total interest-bearing debt fell by USD7.58m;

• capex was USD1.90m;

• no equity was raised.

Together these imply operating cash flow in the order of USD9m+. That figure is an analytical inference, not a reported number. No share buybacks occurred in FY2025 or H1 2026 (AN25; IR26).

Ratios

Analyst-computed from AN25 and IR26 figures. TTM uses period averages.

Notes on the ratios:

• FP2024 ratios use 17-month flows and are not annualised.

• ROIC = NOPAT (operating profit × (1 − effective tax rate)) / (total equity + debt − cash). It is depressed by about USD64m of low-yield investment property.

• The cash conversion cycle uses average trade receivables, inventories and trade payables. For FY2025: DSO about 51 days, DIO about 85 days, DPO about 56 days.

• The TTM coverage figure uses TTM EBIT of USD6.84m over TTM gross finance costs of about USD0.43m.

Trend commentary.

1. Inflection. The Group moved from consecutive losses (FY2021–FP2024) to a small profit in FY2025 and a materially higher run-rate in H1 2026. Profit attributable rose 27-fold year on year to USD2.24m.

2. Margin drivers. Gross margin expanded 640bp year on year in H1 2026 to 21.6%. Management credits higher orders from existing customers and cost control through industrial automation (IR26). Operating leverage is high: revenue grew 11.4% while operating profit grew 128%.

3. Leakage to minorities. In FY2025, NCI captured 84% of group profit (USD2.08m of USD2.47m). This fell to 29% in H1 2026, helped by lower director-loan interest and the increased VS Vietnam stake from April 2026.

4. Low capital intensity. Capex was only USD1.9m in FY2025 (3.0% of revenue) against USD4.4m of depreciation, which raises a question about whether reinvestment will be sufficient to sustain growth.

5. Working capital. Inventories rose 28% in H1 2026 to USD15.6m ahead of order growth; this needs monitoring.

Management guidance. Management gives no numerical guidance. The qualitative outlook (AR25; IR26) is:

• continued Vietnam expansion;

• cost control through industrial automation;

• addition of new customers;

• leasing of Zhuhai investment properties;

• exploration of new markets to diversify income;

• a lower-geared, higher-liquidity balance sheet.

Consensus expectations. None, because there is no coverage. Simply Wall St displays a long-range model chart, but no broker consensus exists.

Bull case

1. Earnings run-rate re-rating. If H2 2026 merely repeats H1 2026, FY2026 profit attributable would be about USD4.5m against a USD16.7m market cap, roughly 3.7x earnings. The higher VS Vietnam stake from 22 Apr 2026 adds to attributable profit.

2. Margin structure validated. A gross margin of 21.65% (H1 2026) is converging on TK Group's ~25%. Operating leverage is evident (+128% operating profit on +11.4% revenue), and the Group is in net cash.

3. Hidden asset value. Owners' equity of USD80.8m includes USD66.1m of Zhuhai investment property. Any lease-up, disposal or redevelopment could crystallise value well above the HK$130m market cap.

Bear case

1. Concentration plus tariffs. Three-quarters of revenue goes to the US through four large customers. A tariff shock or the loss of one programme could erase the profit base.

2. Value may not reach minorities. The structure is family-controlled, with repeated connected transactions, no dividends, NCI leakage (84% of FY2025 profit) and a USD64m property asset that yields 0.6%. The discount to book may persist indefinitely.

3. Quality of disclosure and reinvestment. There is no customer, product or R&D disclosure. Capex is below depreciation, the FY2025 environmental table does not reconcile, and liquidity is thin. Together these limit institutional ownership and the scope for re-rating.

Key catalysts and monitorables (next 12 months)

Analyst verdict. V.S. International Group has transformed itself in two years. It was a shrinking, loss-making Zhuhai moulding business with USD10.9m of revenue in FY2023. It is now a Vietnam-based contract manufacturer generating USD67.7m of trailing revenue, a 21.9% gross margin and USD11.1m of trailing EBITDA, with net cash on the balance sheet. The H1 2026 results are the first clean organic data point and are encouraging: revenue rose 11.4%, operating profit more than doubled, and profit attributable reached USD2.24m. On trailing numbers the stock looks statistically very cheap, at roughly 6.5x earnings, 2x EV/EBITDA and about 0.2x book.

That cheapness is not accidental. The listed entity is a family-controlled satellite of V.S. Industry Berhad, and every major corporate action since 2024 has been a connected transaction with the Chairman's brother. Until the April 2026 step-up, most of the operating profit belonged to minority shareholders in the Vietnamese subsidiary. More than half of reportable assets are Zhuhai investment properties earning close to nothing. Disclosure is minimal. Dividends are absent. Three-quarters of revenue depends on US demand routed through a handful of customers at a time of tariff volatility. Daily liquidity is a few thousand US dollars.

The Vietnam operation itself appears to be a reasonable, improving business. The difficulty lies in how much of that improvement minority shareholders can actually capture. The near-term evidence to watch is threefold: whether the full-year 2026 accounts confirm the H1 margin structure; whether attributable profit rises in line with the larger VS Vietnam stake; and whether the Board shows intent to monetise the Zhuhai property or return capital. Absent progress on at least one of these, the deep discount to book is likely to persist, and the shares remain a high-risk, governance-discounted special situation rather than a conventional value investment.

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Data Gaps and Discrepancies Log