Venture Corporation - Maybank Kim Eng 2020-11-08: When Stars Align

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

Venture Corporation - When Stars Align


Venture Corp's 3Q20 within expectations; Upgrade to BUY

  • Venture Corp (SGX:V03)'s 3Q20 PATMI of S$80.2m (-5.9% y-o-y, +14% q-o-q) was within our expectation but marginally below street’s.
  • Several end-markets are recovering well, and Venture Corp and customers’ are optimistic towards new products and pipeline. Such signs typically lead to an earnings upgrade cycle. As such we upgrade Venture Corp to BUY, now on 18.5x FY21E P/E, from 2x FY21E P/B previously.





Continued sequential recovery in 3Q20

  • Venture Corp's 3Q20 revenue rose 18.2% q-o-q to S$818.4m (-5.8% y-o-y), underpinned by strong demand from customers in the life science & genomics, medical devices & equipment, healthcare & wellness, networking & communications and semiconductor equipment domains.
  • Demand for essential products, such as ventilators and qPCR/dPCR equipment remains strong.
  • Net margin was resilient at 9.8% (flat y-o-y, -0.3ppt q-o-q).


Stars aligning for a new earnings upgrade upcycle

  • During the 3Q20 reporting season, a common theme was customers’ broad-based optimism towards new products and pipeline. We are excited by this as it signals positive end-market receptivity. This corroborates with Venture Corp’s expectation for new products to be released from its R&D labs into manufacturing throughout 2021, including in fast growing domains mentioned above. See Fig2 in PDF report attached below for more details on Venture Corp’s customers’ outlook from latest available earnings/ conferences/ media.
  • Bright spots in end-markets include the return of elective surgeries, 5G deployment, increased focus on R&D to protect against future health threats, and government spending.

Venture Corp - Valuation and risks






Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-11-08
SGX Stock Analyst Report BUY UPGRADE HOLD 23.27 UP 18.460



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