Venture

[winston]

not vested

Venture Corp (VMS SP, UNDER REVIEW, TP: SGD15.10)

Awaiting Confirmation On Outlook; UNDER REVIEW

Results Preview

We place this stock UNDER REVIEW, while we await confirmation on the company’s outlook.

Venture is due to report its 2Q20 results on 7 Aug, and we expect its performance to be relatively weak, due to the closure of its factories in Malaysia caused by the Movement Control Order (MCO), as well as social distancing regulations which slowed down production in Singapore.

However, our channel checks indicate that the most of its factories have since ramped up production, and orders remain strong.

Source: RHB

https://research.rhbtradesmart.com/atta ... ec9933.pdf

[behappyalways]

Venture Corp reports 2Q20 earnings of $70.2 mil, declares interim dividend of 25 cents per share
https://www.theedgesingapore.com/capita ... ents-share

[winston]

not vested

Venture Corp reports 2Q20 earnings of $70.2 mil, declares interim dividend of 25 cents per share

by Felicia Tan

Venture Corporation has posted 2Q20 earnings of $70.2 million for the 2Q20 ended June, some 22.7% lower than the $90.8 million registered in 2Q19.

Revenue for the quarter fell 23.3% y-o-y to $692.7 million due to the Covid-19-induced lockdown measures that restricted the group’s manufacturing activities.

In an Aug 7 statement, Venture Corp said that it rebounded “swiftly” in May and June to achieve a sequential recovery in 2Q.

Quarter-on-quarter, the group registered a 16.4% and 2.9% increase in earnings and revenue respectively. Net profit margin also rose to 1.1 percentage points q-o-q to 10.1%.

Earnings for 1H20 fell 28.1% y-o-y to $130.6 million, while revenue for the half-period period declined by 25.5% y-o-y to $1.37 billion.

Despite the decline in earnings, the group has declared an interim dividend of 25 cents per share for 1H20, compared to the interim dividend of 20 cents a share in 1H19. The payment will be made to unitholders on Sep 18.

Earnings per share (EPS) for the quarter came in at 24.2 cents, which brings the total EPS for 1H20 to 44.9 cents.

In 1H20, employee benefits expense fell 12.0% y-o-y to $145.7 million due mainly to reductions in staff costs, overtime charges and foreign worker levies through rationalisation of manpower resources and improved productivity.

Depreciation and amortisation expense for the half-year increased 20.4% y-o-y to $21.4 million mainly to higher depreciation charge for Right-of-Use (ROU) assets totalling $5.9 million for 1H 2020, compared to the $2.8 million ROU depreciation in 1H19.

As at end June, cash and cash equivalents stood at $834.1 million.

In its outlook statement, Venture Corp said the steady recovery in 2Q20 is expected to continue into the second half of 2020, and that its research and development labs have plans to release “a number of” newly developed products into manufacturing in early 2021.

Source: The Edge

https://www.theedgemarkets.com/categori ... sia?page=2

[winston]

not vested

Venture (VMS SP)

Share Price: SGD18.84
Target Price: SGD18.46
Recommendation: Hold

Resilient, but priced in

1H20 PATMI was in line with our and street estimates, falling 28.2% YoY to SGD130.5m, due to disruptions caused by Covid-19.

We trim FY20-22E EPS by 3-7% to adjust for a slightly softer recovery profile.

That said, our ROE-g/COE-g TP rises to SGD18.46 as we roll forward valuation to 2x FY21E P/B (previous 1.6x FY20E).

Maintain HOLD as the recovery looks priced in. We prefer Frencken (FRKN SP, BUY, TP SGD1.20)
given:-
i) more attractive valuation; and
ii) potential for positive earnings surprise.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... 919d62.pdf

[winston]

not vested

Venture Corp (VMS SP, NEUTRAL, TP: SGD19.00)

Better Outlook Ahead But Valuations Are Fair

Results Review

Stay NEUTRAL, new SGD19.00 TP from SGD15.10, 1% upside with 4% FY20F yield.

Venture’s 2Q20 earnings grew 16.4% QoQ to SGD70.2m, despite being impacted by its factories being shuttered due to lockdowns implemented in several countries.

Going forward, it expects to see sustained demand from several segments, and anticipates the recovery to continue.

Production for new items is also scheduled to ramp up in early 2021.

We lift FY20-20F PATMI by 5% and 8%, while our new TP is pegged to 16x FY21F P/E.

Source: RHB

https://research.rhbtradesmart.com/view ... 1638c707f5

[winston]

vested

Venture Corp (VMS SP) - Rewarded for keeping the faith

Venture Corporation Ltd’s (Venture) 1H20 PATMI of S$130.5m was down 28.2% YoY, which formed 34.8% of our full-year forecast.

Encouragingly, net margin rose from 9.0% in 1Q20 to 10.1% in 2Q20 on the back of good cost control, while balance sheet remained strong with Venture in a net cash position of S$833.0m (from S$713.4m as at 31 Dec’19).

Venture has declared a higher interim DPU of 25 S-cents (20 S-cents in FY19), and is still guiding to pay dividends on par or more than the previous year.

Venture notes that customers who continue to see sustained demand for their essential products and services largely include those from the Life Science, Medical Devices & Equipment, Networking & Communications and Semiconductor-related Equipment domains.

Encouragingly, Venture notes that it is also working to fulfil orders from other technology domains that cater to non-essential end markets, given the gradual reopening of selected economies since late-Apr.

Venture also notes that it expects a continuation of the steady recovery it has seen in 2Q20 into 2H20.

Its plans to release a number of newly developed products into manufacturing commencing early-2021 also provides upside risk to next year’s earnings.

We make adjustments to our forecasts by changing our PATMI assumptions by -2.5% / +8.6% for FY20F and 21F, respectively.

We express our constructive recovery view by applying a target P/E of 16.9x (2 S.D above the 2FY 5-year mean) on our FY21F EPS, thereby deriving a FV of S$22.50 (previously S$17.41). Maintain BUY.

Source: OCBC

[winston]

not vested

Venture Corp 1H20 results see mixed reviews from analysts

by Felicia Tan

DBS Group Research analyst Ling Lee Keng and CGS-CIMB Research analyst William Tng have maintained their “buy” recommendations on the counter as they both expect the company to do even better for 2H20 on the back of strong demand and steady recovery of the supply chain.

Ling has maintained her target price of $20.70, while Tng increased his to $20.14 from $16.78 previously.

“Despite the adversity, VMS still managed to improve its net margins to 10.1% in 2Q20 (vs 9.0% in 1Q20)… Furthermore, against the general market trend of lower dividend, VMS declared a higher dividend per share (DPS) of 25 cents (vs 20 cents last year) on further improvement in its net cash level,” says DBS’s Ling.

Going forward, Ling has identified several key growth areas for the group, which includes Life Science, Medical Devices & Equipment, Networking & Communications and Semiconductor-related Equipment domains.

Ling has also maintained her forecasts of earnings per share (EPS) of $1.11, and DPS of 70 cents for FY20F.

Meanwhile, CGS-CIMB’s Tng has slashed Venture Corp’s EPS for FY20F by 8.6% as the group’s net profit came in below his expectations at 39% of his FY20F target.

“The multiple change (previously 12.5x, 0.5 standard deviation below its 13-year forward average P/E of 15x) reflects a potential re-rating in FY21F if new product introductions by Venture are successful.

Tng has estimated core EPS to come in at $1.07 and DPS of 70 cents for FY20F.

On the other hand, Maybank Kim Eng analyst Lai Gene Lih has maintained “hold” on Venture Corp as the recovery looks priced in.

While Lai has trimmed the group’s FY20-22E EPS by 3-7% to “adjust for a slightly softer recovery profile”, he has increased its target price to $18.46 from $14.66 previously.

“Long term, we see prospects for:
i) margin accretion through helping customers launch market-leading life science/ med-tech products;
ii) growth in new domains (e.g. semiconductor equipment); and
iii) continued operational excellence, as seen with the proactive measures VMS has taken to handle Covid-19 disruptions,” he says.

Lai forecasts EPS of $1.01 and DPS of 75 cents for FY20e.

Conversely, PhillipCapital’s head of research Paul Chew has downgraded his recommendation on Venture Corp to “neutral” with a higher target price of $18.40 (previously $16.60).

Chew, too, expects 2H20 to be stronger than 1H20, which saw a one-month-los in revenue.

“We expect some spillover of uncompleted orders to occur into 2H20. Venture mentioned a number of new products to be released in early 2021,” he says.

As such, Chew has raised FY20e PATMI by 5% and valuation metric to “account for the higher visibility in the recovery as the lockdown eases”.

“Our gross margin forecast is increased by 1% point to 26%. We nudged up our valuation metrics to 16x PE (prev. 15x). Higher valuation is warranted as recovery is underway and earnings temporary depressed by the pandemic.

VMS is paying an attractive 4.4% yield, well supported by an $833 million net cash balance sheet. New life science projects and shift in the supply chain from China to SE Asia will be supportive of revenue growth,” he adds.

Source: The Edge

https://www.theedgesingapore.com/capita ... s-analysts

[winston]

not vested

Venture Corp (VMS SP, NEUTRAL, TP: SGD20.20)

NDR Key Takeaways; Stay NEUTRAL

Company Update

NEUTRAL, SGD20.20 TP (17x FY21F P/E), nil upside with c.4% FY20F yield.

We hosted a non-deal roadshow for Venture recently, and came away with the following highlights.

It will likely see a steady recovery in 2H20, and is fulfilling the backlog of orders now.

Earnings visibility is clear for 2H20F, and Venture’s research & development segment aims to release new products for manufacturing companies from early 2021.

The stock is trading above its historical valuation, which justifies our call.

Source: RHB

https://research.rhbtradesmart.com/view ... 0bd14dc36c

[winston]

not vested

Venture Corporation (VMS SP)
Better Growth Prospects Of Clients Warrant A Re-rating; Upgrade To BUY

Consensus revenue forecasts of Venture’s Test & Measurement and Life Sciences/ Medical clients show a strong recovery in 2021, to levels comparable or better than in 2019.

Venture deserves to trade at a higher valuation, given better earnings prospects of its clients, sustainable dividend yield of 3.9% and outperformance vs peers, with net margin of about 10% even during the challenging environment in 1H20.

Upgrade to BUY with a 35% higher target price of S$23.76, or +1SD to mean PE of 19.4x on 2021F
earnings.

Source: UOBKH

https://research.uobkayhian.com/content ... 9577697471

[winston]

not vested

Venture Corporation (VMS SP)
Clients’ Earnings Indicate The Sequential Recovery Is Intact

We expect 3Q20 net profit to grow 11% qoq on the back of the gradual reopening of markets since Apr 20 and fulfilment of orders of end products that were deemed nonessential during the lockdown.

The latest earnings of Venture’s clients, including Thermo Fisher, Fortive and Waters, indicated strong growth of 14-23% qoq.

Also, consensus revenue forecasts suggest strong recovery for some of Venture’s clients in
2021 to levels comparable or higher than 2019.

Maintain BUY and target price of S$23.76.

Source: UOBKH

https://research.uobkayhian.com/content ... fdc4d91385