by winston » Tue May 12, 2020 11:19 am
not vested
Venture Corp: Looking past the lockdown
Venture Corporation Ltd’s (Venture) 1Q20 results were under expectations.
Revenue fell 27.5% YoY to S$673m, due to lockdown measures implemented in various countries.
Net profit fell 33.6% YoY to S$60.3m, constituting ~16% of our full-year forecast.
Despite the challenges, Venture has still managed to clock 9.0% in net profit margin.
We believe that supply-side constraints are starting to ease up, as most of its operating entities have received exemptions to operate without constraints on working hours or headcount by end-Apr.
On the demand-side, Venture notes that it sees continued strengths in demand from certain technology domains, as well strong demand for products that are being used to help COVID-19-infected individuals.
The group also believes that it can benefit from opportunities due to the inevitable realignment of the global supply chain, which we believe is an existing tailwind arising from the trade-war previously.
Venture remains in a strong financial position, with net cash increasing from S$713.4m in 4Q19 to S$852.5m in 1Q20.
Still, following adjustments, we take down our PATMI forecast by 10.2% and 9.3% for FY20 and FY21, respectively.
We apply a target P/E of 14.2x on our FY21F EPS, thereby deriving a FV of S$17.41 (previously S$18.09). Maintain BUY.
Source: OCBC
It's all about "how much you made when you were right" & "how little you lost when you were wrong"