Grand Venture Technology - CGS-CIMB Research 2021-02-23: Gearing Up For Growth

GRAND VENTURE TECHNOLOGY LTD (SGX:JLB) | SGinvestors.io GRAND VENTURE TECHNOLOGY LTD (SGX:JLB)

Grand Venture Technology - Gearing Up For Growth

  • Grand Venture Technology's FY20 revenue/net profit was 12%/22% above our forecast, driven by strong y-o-y revenue growth in the semiconductor and life science segments.
  • Grand Venture Technology expects the growth momentum in its life sciences and medical segments to continue into FY21F.
  • Reiterate ADD with a higher S$0.605 target price as more customer wins drive higher profitability.



Better-than-expected FY20

  • Grand Venture Technology (SGX:JLB)’s FY20 revenue was 12% above our expectations. The semiconductor segment saw y-o-y revenue growth of 77% versus a 22% decline in FY19. The life sciences, electronics and others segments saw 18% y-o-y revenue growth. See Grand Venture's announcements.
  • The semiconductor segment accounted for 69% of Grand Venture Technology's FY20 revenue while the life sciences, electronics and others segments accounted for the remaining 31%.
  • Overall gross profit margin fell to 30.8% in FY20 versus 37.2% in FY19 as COVID-19 affected production at Grand Venture Technology’s plants in Malaysia and China. Despite this, FY20 net profit came in 22% above our forecast.
  • In FY20, Grand Venture Technology suffered exchange losses of S$0.5m and received COVID-19 related grants/rebates amounting to S$0.6m.


Continues to be growth oriented

  • On 12 Jan 2021, Grand Venture Technology entered into a conditional placement agreement with NT SPV 12, a wholly-owned subsidiary of private equity fund, Novo Tellus P/E Fund 2, to raise net proceeds of approximately S$23.5m (71.5m new shares at a placement price of S$0.33). S$19m of the proceeds have been earmarked for M&A.
  • We think Grand Venture Technology will continue to invest in its capabilities and production capacity over FY21-22F in anticipation of strong demand from its semicon and life sciences, medical equipment customers.


Reiterate ADD on Grand Venture Technology's growth potential






William TNG CFA CGS-CIMB Research | Darren ONG CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-23
SGX Stock Analyst Report ADD MAINTAIN ADD 0.605 UP 0.360



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