Venture Corporation - RHB Invest 2020-02-24: Time For a Positive Rerating

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

Venture Corporation - Time For a Positive Rerating

  • Upgrade to BUY from Neutral, with a higher Target Price of SGD19.3, from SGD16.3, a 14.9% upside plus a 4% yield.
  • Venture Corp reported a decent 3Q19 which, combined with lowered tensions between the US and China after the conclusion of the Phase 1 deal, make us expect Venture Corp’s ramp up projects in 4Q19 and 1Q20 to be successfully.
  • We think the stock performance over the next quarters could outperform the Street’s expectations. We lift our FY19 and 20F NPAT estimates by 3% and 5% and roll over our Target Price to FY20F, based on a 15x P/E.



4Q19 likely to be better than consensus expectations.

  • Venture Corp (SGX:V03) enjoyed a strong 3Q19 y-o-y mainly due to a weaker base in 3Q18. Management guided for a continuation of business and geopolitical uncertainties. Over the next 12 months, the company will continue to support several partners in their new and key product launches.
  • However, as Venture Corp enjoyed a strong 4Q18 we expect a weaker 4Q19 y-o-y due to the current headwinds in the macro environment and continued uncertainties resulting from the trade war.
  • However, the performance in 4Q19 should still be above Street’s expectations (we expect 4Q19 NPAT at c.SGD90m) especially since some of the company’s key customers have already reported positive results.


Long-term strategy still intact.



FY19F dividend of SGD0.70 likely to be maintained implying an yield of at least 4.2%.

  • Last year, management declared a total DPS of SGD0.70; if management maintains the same amount for FY19F it would mean a 55% payout.
  • Key risks are slowing economic growth and the worsening of the US-China war.





Jarick Seet RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-02-24
SGX Stock Analyst Report BUY UPGRADE NEUTRAL 19.30 UP 16.300



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