Venture Corporation - Maybank Kim Eng 2020-11-21: Earnings Inflection; Maintain BUY

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

Venture Corporation - Earnings Inflection; Maintain BUY


Earnings momentum building in FY21; BUY

  • We believe recovering end-markets and customers’ buoyant mood towards new products and pipeline create favourable conditions for an earnings upgrade cycle in FY21E as Venture Corp (SGX:V03) launches new products across several domains.
  • Potential upside drivers include stronger than expected momentum and positive margin surprise from deepening engagement with customers, in our view.
  • Maintain BUY on Venture Corp with target price of S$23.27 (18.5x FY21E P/E).



Earnings upgrade cycle from new products

  • We believe Venture Corp is at the cusp of an earnings upgrade cycle as it expects a breadth of new products to be released from its R&D labs into manufacturing across several fast growing domains throughout 2021. End-markets are also recovering, and customers are broadly optimistic about new products and pipeline, which we believe signals positive end-market receptivity.
  • Current bright spots include the return of elective surgeries, 5G deployment, increased focus on R&D to protect against future health threats, and government spending.


Areas of upside

  • We project Venture Corp's earnings to grow 23% in FY21E, propelled by recovering end-markets and the launch of new products. We see
    1. our own underestimation of momentum and
    2. room for margin upside as potential upside drivers.
  • In particular, we view that margins could positively surprise because some of the products launched are in the medical technology and life science domains, where Venture Corp has a good track record of delivering value add and has continually deepened relationships with customers.

Valuation and risks





See also report: Technology Stocks - Maybank Kim Eng 2020-11-21: Riding A New Wave Of 5G, IoT, AI & EV; Upgrade to POSITIVE.




Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-11-21
SGX Stock Analyst Report BUY MAINTAIN BUY 23.270 SAME 23.270



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