VENTURE CORPORATION LIMITED
V03.SI
Venture Corp - A Great 4Q16 Anticipated
- We believe the outlook continues to be bright for Venture despite a challenging macro environment. With a slightly better-than-expected performance in 3Q16, we are projecting a strong 4Q16 ahead.
- The Test and Measurements segment continues to grow strongly, underpinned by orders from existing and new customers.
- Going forward, we expect value creation and continued improvements in operational excellence across the group’s facilities as well as its entire value-chain, which would continue to drive margin improvements.
- BUY call and SGD9.90 TP are unchanged (10% upside including dividend yield).
Strong 4Q16 highly anticipated.
- Going forward, we expect Venture Corp (Venture) to continue to register steady growth despite a challenging economy, especially in 4Q16.
Another exceptional quarter in 3Q16.
- Despite an uncertain economy, Venture managed to deliver a 16.9% YoY increase in 3Q16 NPAT. The higher net margin was attributed to value creation through stronger complementary and collaborative partnerships.
Strong growth at two key segments –
- Networking & Communications and Test & Measurement/ Medical/ Others achieved the highest growth YoY of 13.6% and 25.3% respectively in 3Q16. This helped to alleviate losses at the remaining segments. Looking ahead, we expect changes in segmental growth at the group, given the changing customer mix in 2017.
Risks.
- Downside risks to our call include a further slowdown in the economy.
Maintain BUY with unchanged DCF-backed TP of SGD9.90.
- On the back of a strong 3Q16, we remain positive on Venture and expect it to continue its positive performance in 4Q16.
- Our DCF-backed TP of SGD9.90 implies FY16F P/E of 15.8x (within historical P/E range of 15-17x), representing a 10% upside including dividends.
Jarick Seet
RHB Invest
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http://www.rhbinvest.com.sg/
2016-11-07
RHB Invest
SGX Stock
Analyst Report
9.900
Same
9.900
