Venture Corp - RHB Invest 2016-11-07: A Great 4Q16 Anticipated

Venture Corp - RHB Invest 2016-11-07: A Great 4Q16 Anticipated 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.


  • 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 | 2016-11-07
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 9.900 Same 9.900