VENTURE CORPORATION LIMITED
V03.SI
Venture Corp - Slow Start To 1H16
- Venture’s recipe for success would still be in creating value for customers, as it continues to focus on developing products in key areas like life sciences/medical, high-end instrumentation and 3D printing.
- However, management highlighted that customers have toned down their forecasts due to an uncertain outlook and expects a slower 1H16, before business picks up in the second half of the year.
- Thus, we trim our earnings estimate for this year by 6%, which results in a lower TP of SGD9.10 (from SGD9.20, 13% upside).
- Maintain BUY.
Aims to create more value per dollar of revenue.
- Venture’s strategy, going forward, is to aim for value creation, ie increase its value per dollar of revenue.
- It would also continue to grow its market share among existing customers by being involved with more products and projects.
Strong growth in two divisions.
- Revenues from its networking and communications unit as well as that of its test and measurement segment grew 16.3% and 10% YoY respectively.
- Going forward, we continue to expect growth to likely come from these segments, especially for products related to the scientific/medical space.
A better 2H16 than 1H16.
- With an uncertain outlook and weakening economic conditions, customers have toned down their forecasts – especially for 1H16. As a result, management expects a slower 1H16, before orders pick up in 2H16.
- Key risks include an economic downturn and a weakening of the USD.
Maintain BUY.
- With an uncertain outlook and weakening economic conditions, we trim our earnings estimates for this year by 6%, resulting in a slightly lower TP of SGD9.10, based on a 15.5x FY16F P/E and backed by a 6.2% dividend yield.
- Maintain BUY.
Jarick Seet
RHB Invest
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http://www.rhbinvest.com/
2016-02-29
RHB Invest
SGX Stock
Analyst Report
9.10
Down
9.20