VENTURE CORPORATION LIMITED (SGX:V03)
Venture Corp - Steady Recovery
Recovery continues; Maintain BUY
- Venture Corp (SGX:V03)'s 2H20 PATMI of S$166.8m (-8.1% y-o-y) was in line with our estimate, and met the lower end of street’s.
- We trim our Venture Corp's FY21-22E earnings per share forecasts by 4-5% to fine-tune margin assumptions, although our revenue numbers are largely unchanged – reflecting our confidence of the ongoing recovery. New products are on track for launch in 2Q21 and into 2H21.
- Maintain BUY with lower target price of S$22.00 on unchanged 18.5x FY21E P/E (1.5 standard deviation above 4-year mean).
Resilient revenue and margins from diversity
- Venture Corp's 2H20 revenue fell 8.6% y-o-y to S$1.65b, although this was up 20.6% h-o-h. Several end-markets were affected by COVID-19, particularly those facing retail end-markets (e.g. POS, consumer electronics), but this was offset by resilience in life-science, networking and communication and semicon, which are beneficiaries in the pandemic.
- As Venture Corp’s value-add is higher in the life-science domain, net margin was flat y-o-y at 10.1% despite lower volumes.
Leveraging R&D to capture opportunities
- Growth in the life science domain is expected to be driven by genomics-related products and advanced equipment for analysis/ diagnostics in biological systems. COVID-19 also presents opportunities to develop pandemic-related testing and diagnostic products.
- Venture Corp says it is leveraging its R&D capabilities to develop cutting-edge products in life science, medical devices and lifestyle and wellness consumer products.
Moving into interesting domains
- Venture Corp will widen its participation in robotics, automation and AI, and advanced semiconductor equipment domains.
- Venture Corp is also optimistic in being able to capture value in adjacent domains, such as battery EVs, through its breadth of know-how across multiple domains.
- 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 believe key risks are:
- outbreak of COVID-19 in Venture Corp’s plants, which may hinder production schedules;
- chip shortages within supply chains Venture Corp are exposed to; and
- slower-than-expected economic recovery.
Gene Lih Lai CFA
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-03-01
SGX Stock
Analyst Report
22.00
DOWN
23.270
