Venture Corporation - RHB Invest 2020-08-26: NDR Key Takeaways; Stay NEUTRAL

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

Venture Corporation - NDR Key Takeaways; Stay NEUTRAL

  • We hosted a non-deal roadshow for Venture Corp (SGX:V03) recently, and came away with the following highlights. It will likely see a steady recovery in 2H20, and is fulfilling the backlog of orders now.
  • Earnings visibility is clear for 2H20F, and Venture Corp’s research & development segment aims to release new products for manufacturing companies from early 2021.
  • NEUTRAL, SGD20.20 Target Price (17x FY21F P/E), nil upside with c.4% FY20F yield.
  • Venture Corp is trading above its historical valuation, which justifies our call.


Production unlikely to return to high levels.

  • Production cannot revert to pre-COVID-19 levels, due to social distancing measures. Venture Corp’s main aim now is to meet demand, balance orders between customers, and deliver products and services to them efficiently. Its top 10 customers now account for 45-55% of revenue, vs 50-60% in previous years. Customers are also becoming increasingly diversified.


Trying hard to maintain margins despite lower revenues.

  • Venture Corp continues to work with its customers, implementing further cost controls and improving production efficiency. ASP pressure will align to end-market demand, in the meantime. Non-essential market segments may see some pressure, given the slower rate of recovery.


Growth in several segments.

  • Customers that have increased orders are mainly from the life sciences, medical devices & equipment, networking & communications and semiconductor-related equipment domains. Venture Corp has also gained meaningful traction with its new customers, including its existing semiconductor partner in 2Q20.

Our target price is now pegged to a higher 17x FY21F P/E






Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | https://www.rhbinvest.com.sg/ 2020-08-26
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 20.20 UP 19.000



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