Venture Corporation - RHB Invest 2019-06-26: Major Headwinds Ahead

VENTURE CORPORATION LIMITED (SGX:V03) | SGinvestors.io VENTURE CORPORATION LIMITED (SGX:V03)

Venture Corporation - Major Headwinds Ahead

  • Maintain NEUTRAL but Target Price lowered to SGD16.30 from SGD19, 1% downside – pegged to 13x FY19F P/E.
  • Things are not going well for global manufacturing with the worsening of the US-China trade conflict. We expect headwinds in 2H ie product delays, and deterioration of margins due to a lower revenue base. As such, we lower our FY19F PATMI by 8.4% to reflect these potential headwinds.



Softening seen among peers – weak 2Q19 expected.

  • We note that global peers have been impacted, as we see weaknesses in their financials. Despite VENTURE CORPORATION (SGX:V03) being more resilient, it should be hard for the company to avoid headwinds ahead. As a result, we expect profitability to be impacted in the coming quarters – especially in 2Q19.


FY19F DPS of SGD0.70 likely maintained.

  • Management declared total DPS of SGD0.70 for FY18, implying a 55% payout of its NPAT. Management also guided that it is looking to pay out sustainable dividends, and we expect FY19F dividends to be likely the same, or higher than that of FY18, which should result in a yield of c.4%. See Venture Corp's dividend history.


Growth prospects dampened by trade dispute.

  • Venture Corp will continue to focus on its long-term strategy and build its trade dispute between China and the US.
  • The mixed business sentiment across its diversified customer base has also trade dispute mentioned above.


Key risks

  • Key risks are economic growth, and the worsening US-China trade conflict.





Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | https://www.rhbinvest.com.sg/ 2019-06-26
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 16.30 DOWN 19.000



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