Venture

[winston]

not vested

Venture Corporation - More Room To Grow (BUY, TP SGD 9.75, VMS SP, Technology)

2Q16 was in line with expectations.

Continued improvement in revenue mix boosted net margin to management’s long-term target of 6-8%.

Topline was driven by businesses with more value-creation potential and better margins, i.e. Test & Measurement, Life Sciences and Networking, up to 60% of the total pie from 50% previously.

With room for margins to further improve, the stock’s re-rating that started in early 2016 can extend further; maintain our BUY call with a street-high TP of SGD9.75.

Source: DBS

[winston]

not vested

UOB Kay Hian Research has a “buy” recommendation on Venture.

The research house says that the technology services, products and solutions company’s operating performance is on track, despite geopolitical uncertainties relating to Britain’s exit from the European Union and the US presidential election.

It adds that Venture’s production run rates in July and August are slightly ahead of expectations, auguring well for its performance in 3QFY2016 ended Sept.

Furthermore, UOB Kay Hian Research says that Venture has benefitted from customers shifting more production to its Malaysian operations, which offer more competitive pricing for electronic manufacturing services.

The research house also sees various opportunities for growth from a shift in product mix towards test and measurement as well as medical/life science devices.

Despite a difficult operating environment, UOB Kay Hian Research adds that Venture has managed to generate growth by creating value for customers, so as to win new products and secure increased allocation.

The research house raised its target price on the stock from $9.82 to $10.30.

For 2QFY2016 ended June, Venture posted a 20.3% y-o-y surge in earnings to $43.4 million, on the back of a 3.4% rise in revenue to $683.3 million.

The company attributed the better performance to value creation and continued operational improvements across its entire value-chain. Its net profit margin improved to 6.4% during the quarter, compared with 5.5% in 2QFY2015.

Venture also has a strong balance sheet. As at end-June, the company had cash and cash balances of $377.5 million. After taking into account borrowings of $92.7 million, it had a net cash position of $284.8 million.

For FY2015 ended December, the company paid a dividend of 50 cents a share, unchanged from the previous year. This represents a hefty yield of over 5% at its current share price.

Source: The Edge

[winston]

Expect continued earnings momentum from Venture Corp: CIMB

By Michelle Zhu

SINGAPORE (Nov 7): CIMB is maintaining its “add” call on Venture Corp and raising its target price to $10.94 from $10.57 previously, after the technology services provider posted 16.9% higher 3Q earnings of $47.4 million from a year ago.

(See also: Venture posts 16.9% earnings growth to $47.4 mil for 3Q)

In a Friday report, analyst William Tng highlights that the group’s core profit was up by 24.5% for the quarter although revenue only rose 1.8% y-o-y – and would have posted a 35.5% y-o-y increase in core profit if not for a US$3 million inventory write-off.

He also notes Venture’s strong balance sheet with net cash of US$244 million for the quarter versus US$206 million as at end-2Q16.

As such, the analyst has raised the group’s earnings forecasts by 3.5% to 3.8% over FY16-FY18F, as he factors in the margin expansion observed from 3Q16 and 9M16.

“Going forward, we expect profit growth to outpace revenue growth as Venture focuses on servicing customers that need Venture’s higher profit margin capabilities,” says Tng.

“As we highlighted previously, FY17F earnings will also be aided by the cessation of the amortisation of intangibles [with only US$5.3 million amortisation left].”

Shares of Venture closed 2 cents higher at $9.52.

Source: The Edge

http://smr.theedgemarkets.com/article/e ... e-87358173

[winston]

not vested

Venture wins over analysts over with results and plans

By Benjamin Cher

SINGAPORE (Nov 7): Venture Corporation, the provider of electronic manufacturing services (EMS) and original design manufacturing (ODM), has won the favour of UOB Kay Hian and DBS.

Citing its outstanding 3Q16 results and plans for growth, UOB is maintaining a “buy” with a target price of $10.90 while DBS is upgrading the stock to a “buy” with a target price of $11.

(See also: Venture posts 16.9% earnings growth to $47.4 mil for 3Q)

DBS and UOB note that Venture’s 3Q16 results came in better than expected, with DBS analyst Sachin Mittal pointing out that the group has seen consistent revenue growth over the past 12 quarters. UOB analyst Jonathan Koh notes that the results would have been better if not for an inventory write-off of $4.1 million.

The research houses also note that the shift towards test and measurement/medical segment has benefitted the company, with UOB’s Koh pointing out that the segment accounted for 44.1% of revenue. And the fact that the company has added 100 new customers in the last six years in this segment is likely to keep the momentum going, notes DBS.

“Fixed dividend commitments of 50 cents (5.3% yield) coupled with high digit earnings growth prospects in FY17 is attractive in our opinion,” says Sachin.

UOB’s Koh says Venture’s good results are due to a disciplined and concerted strategy to generate sustainable growth. There are three core pillars to its strategic blueprint.

These include developing know-how in selected domains such as high-end instrumentation and medical and life science; emphasising value generation for customers; adopting the Kaizen philosophy of productivity as well as maintaining a lean manufacturing setup for cost efficiency.

“While many company could elucidate similar management mantra, Venture differentiates itself through flawless execution,” says Koh.

Venture is also building new engines of growth, notes Koh, and has secured six new customers in the networking and communications, retail store solutions/industrial and test and measurement/medicals segments in 2015, which will contribute to growth in 2017 and beyond.

Koh also notes that Venture has been able to grow despite adversarial and uncertain operating environment. The company sees opportunities in electronics content in cars, factories, hospitals and even buildings, including Internet of Things and Smart Nation initiative.

DBS’ Sachin notes that Venture is also benefitting from the stronger SGD to MYR rate, as bulk of the labour costs originate from Malaysia. This would benefit Venture’s margins despite foreign worker levies. A 2% rise in the exchange rate will have a 1.5% positive impact on Venture’s earnings, Sachin claims.

“In light of improving margins and stronger than expected top line performance, we revise our earnings forecast upward for FY16 and FY17 by 6% and 9%,” says Sachin.

Shares of Venture closed 6 cents at $9.60.

Source: The Edge

http://smr.theedgemarkets.com/article/v ... b-87358173

[winston]

not vested

UOB’s “buy” picks include Venture, which the analyst believes will benefit from a rising US$ versus the Malaysian ringgit given that its facilities – which account for 65% of the group’s manufacturing capacity – are located in Johore and Penang.

Most of Venture’s revenue is also US$ denominated, he adds, while its dividend yield of 5.6% is among the highest in the technology sector

Source: The Edge

[winston]

not vested

Venture Corp: Beneficiary of USD strength

In our view, Venture Corporation Ltd (VMS) will be a beneficiary of such strength in USD against the SGD, with ~90% of its revenue denominated in USD.

This could further boost its sales should USD strength sustain.

On the costs side, with ~60% of its manufacturing operations done in Malaysia, VMS may potentially see some lift in earnings if the recent weakness of MYR against SGD persists ahead.

Source: OCBC

[winston]

This stock is venturing into all the right sectors

By Gwyneth Yeo

SINGAPORE (Dec 22): Venture Corporation seems to appear at the right place at the right time, with revenue consistently growing over the past four years.

Looking closer at its numbers, over 40% of Venture’s revenue now comes from the growing testing, medical and life sciences industries.

On the other hand, the shrinking computer peripherals & data storage segments currently contribute about 11% to group revenue.

As such, DBS Group Research upgraded the stock to a “buy” with a target price of $10.90.

“Venture has established strong relationships with companies researching on Genome sequencing, which could see healthy growth over the medium term with increasing investments and use of MedTech,” says DBS analyst Sachin Mittal, adding that the focus on lower-cost technologies in healthcare would benefit the test, medical and life science segment.

In fact, the changed business mix is expected to impact the group’s bottomline as well. “We believe that the specialised nature of the medical and life science segment permits Venture to realise better margins on contracts,” said Mittal.

Beyond that, Venture stands to benefit from the weakening ringgit as 60% of its staff costs are incurred in Malaysia. The closer proximity of its newly acquired land at Batu Kawan Industrial Park to Penang Island’s tech electronics manufacturing industry could also result in the increased availability of specialised labour and better supply chain networks.

Shares of Venture closed 13 cents lower at $9.81.

Source: The Edge

http://smr.theedgemarkets.com/article/s ... up-content

[winston]

not vested

Venturing into new frontiers

Initiate with OUTPERFORM. We initiate coverage on Venture with an OUTPERFORM rating and a DCF-based TP of S$11.60, implying 18% potential upside.

Venture is a global Electronics Manufacturing Services (EMS) provider with a focus on High Mix Low Volume (HMLV) manufacturing. We expect further share price upside from:
(1) product-mix shift towards medical,
(2) a recovery of IT spending, and
(3) favourable currency tailwinds.

Repositioned for growth. Since 2008, Venture has seen a shift in its product portfolio towards the higher-growth Test and Measurement(T&M)/Medical and Life Science (Medical) segment, which could lead to higher margins due to its higher complexity.

As of 9M16, the T&M/Medical segment was the largest contributor, making up 42% of Venture’s revenue (vs 15% in 2008). We expect global IT spending to also recover (with growth coming in the low single-digit range from FY17 onwards), as the sales outlook of several of Venture's customers has turned positive.

Further tailwinds from USD strength. We believe Venture benefited from the USD strength in the last quarter of 2016. A 5% strengthening of the USD should result in a ~3% impact on Venture's bottom line. Over the longer term, we see Venture as a beneficiary of industrial Internet of Things (IoT) adoption, and global smart city expansion.

Attractive dividend yield of 5%; potential for more. Venture’s dividend yield of ~5% is in line with its global peers and above the Singapore market average (4%), with scope for further increase due to its strong cash flow generation.

The stock trades at a 2017E P/E of 14x, above the industry average of 12x, which we believe is sustainable given its differentiated HMLV strategy and higher margin profile.

Key risks to our view include:
(1) a further slowdown in IT spending,
(2) tax and labour regulation changes, and
(3) the reversal of currency tailwinds.

Source: CS

https://plus.credit-suisse.com/research ... 1AA-WEqkbN

[behappyalways]

Venture Corp posts 20.6% rise in 4Q earnings to $54.1 mil on higher revenue
http://www.theedgemarkets.com.sg/articl ... er-revenue

[winston]

not vested

Venture Corp posts 20.6% rise in 4Q earnings to $54.1 mil on higher revenue

By Michelle Zhu

SINGAPORE (Feb 24): Venture Corp, the electronics services provider, posted 4Q16 earnings of $54.1 million, 20.6% higher from $44.8 million of earnings declared a year ago on higher revenue.

For the 12 months ended Dec, total earnings grew 17.3% to $180.7 million from $154 million in FY15.

The improvement in profitability was driven by revenue growth, value creation, as well as improvements in operational excellence across the group’s facilities and its entire value-chain, says Venture in its financial results announcement on Friday.

Revenue for the quarter grew 23.1% to $854.6 million from $694 million in the previous year, largely due to new product/programme introduction by customers, in addition to revenue growth from customers won in recent years.

Net margin for 4Q registered at 6.3% from 6.5% in the previous year, while diluted earnings per share was 19.3 cents compared to 16.2 cents in 4Q15.

The group has recommended a final dividend of 50 cents per share on a one-tier tax-exempt basis for FY16.

In its outlook, Venture says it remains steadfast in strengthening its ‘Clusters of Excellence’ and deepening its partnerships for value creation with leaders in technology domains of interests – and will continue to augment its solid customer base, forging new complementary and collaborative alliances through its well-regarded engineering and manufacturing capabilities.

“Venture will also continue to invest in growing its core groups of management, technical and professional talents to realise its mission to be a leading global provider of technology services, products and solutions,” adds the group.

Shares of Venture closed 0.6% higher at $10.32 on Friday before the results announcement.

Source: The Edge

http://www.theedgemarkets.com.sg/smr/?q ... 9-87358173