VENTURE CORPORATION LIMITED (SGX:V03)
Venture Corporation - Awaiting Confirmation On Outlook; UNDER REVIEW
- We place Venture Corp (SGX:V03) UNDER REVIEW, while we await confirmation on the company’s outlook.
- Venture Corp is due to report its 2Q20 results on 7 Aug, and we expect its performance to be relatively weak, due to the closure of its factories in Malaysia caused by the Movement Control Order (MCO), as well as social distancing regulations which slowed down production in Singapore. However, our channel checks indicate that the most of its factories have since ramped up production, and orders remain strong.
Improvement in the quarters ahead.
- Venture Corp is looking ahead post lifting of the lockdowns in: countries where its global supply chain is at, as well as in places where it has operations – China, Malaysia, Singapore, Spain, and the US. By end-April, most – if not all – of its operating entities received exemptions to operate without constraints on the number of employees on duty or limits on working hours. As such, the supply side of its businesses has resumed operations, while these units continue to comply with safety and precautionary measures applied for on-site employees.
- We expect its April data to remain weak, but Venture Corp’s performance should improve in the quarters ahead.
A stronger 2H20F.
- Management also expects to record stronger 2H20 numbers, supported by traction with new and existing partners. There will also be support for the production of several new items from its partners across multiple technology domains like life sciences, healthcare & wellness, instrumentation, and networking & communications.
- Venture Corp also expects to gain momentum with several new partners in the life sciences, genomics, healthcare & wellness industries. Contributions from these new partners are expected to increase post 2020.
Net cash balance sheet and attractive dividends.
- As of 1Q20, Venture Corp has a net cash position of SGD852.5m, and will likely be able to sustain its dividends – just like it did during the last financial crisis, even though revenue and profits fell. We expect a 3.9% dividend yield for FY20.
- 1Q20 and part of 2Q20F will likely be marked by a short-term blip caused by COVID-19.
- See Venture Corp Share Price; Venture Corp Target Price; Venture Corp Analyst Reports; Venture Corp Dividend History; Venture Corp Announcements; Venture Corp Latest News.
- We anticipate Venture Corp’s results to rebound in the next few quarters, and for it to emerge stronger than its competitors – due to its sturdy balance sheet, as well as the implementation of key initiatives.
- Key downside risks to its outlook are decelerating economic growth, and the US-China trade war worsening.
Jarick Seet
RHB Securities Research
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Lee Cai Ling
RHB Invest
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https://www.rhbinvest.com.sg/
2020-08-05
SGX Stock
Analyst Report
15.100
SAME
15.100
