Venture Corporation - CGS-CIMB Research 2020-08-08: FY21F Could Be A Game Changer

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

Venture Corporation - FY21F Could Be A Game Changer

  • Venture Corp's 1H20 net profit was below our expectations at 39% of our full-year forecast but only slightly below consensus expectations at 42%.
  • Interim DPS was raised to S$0.25 from S$0.20 in 1H19, and Venture Corp guided that the steady recovery seen in 2Q20 is expected to continue into 2H20.
  • Reiterate ADD on Venture Corp on its long-term prospects and bottom-line focused strategy.



2Q20 marks the bottom

  • Venture Corp (SGX:V03)'s 1H20 net profit was below our expectations at 39% of our FY20F forecast. Against consensus expectations, 1H20 net profit was slightly below at 42%. 1H20 revenue fell 25.5% y-o-y due to disruptions in the global supply chain and factory lockdowns in Malaysia, Spain, the US and China caused by measures to combat the COVID-19 pandemic.
  • Although Venture Corp managed to mitigate the impact, orders from some customers operating in non-essential end-market segments were pushed back to later quarters, hence the 2.9% q-o-q revenue growth in 2Q20.
  • From May onwards, production has largely resumed at Venture Corp’s factories.
  • The key positives in Venture Corp's results are:
    1. better product mix and judicious cost control, leading to 1H20 net profit margin of 9.6%, just 0.3% pt lower than 1H19;
    2. net cash balance grew to S$833.0m at end-Jun 2020 (end-Dec 2020: S$713.4m), and
    3. interim DPS raised to S$0.25 (1H19: S$0.20).




2H20F to be stronger…

  • With the gradual reopening of some economies since late-Apr 2020, Venture Corp is working to fulfill customers’ orders from the other technology domains serving non-essential end-markets. The steady recovery seen in 2Q20 is expected to continue into 2H20, in our view.
  • Demand from customers in the life science, medical devices & equipment, networking & communications, and semiconductor-related equipment domains remains strong.


…but FY21F is the year to watch






William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2020-08-08
SGX Stock Analyst Report ADD MAINTAIN ADD 20.14 UP 16.780



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