Venture Corporation - CGS-CIMB Research 2021-02-27: Expecting A Better FY21 Ahead

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

Venture Corporation - Expecting A Better FY21 Ahead

  • Venture Corp's FY20 revenue was deemed in line, at 95.3%/97.4% of our/Bloomberg consensus expectations.
  • FY20 net profit at 96.5%/97.6% of our/Bloomberg consensus expectations was also deemed in line (-17.1% y-o-y due to the COVID-19 pandemic).
  • We expect to see y-o-y growth in FY21F net profit. Reiterate ADD.



Venture Corp's FY20 net profit in line with expectations

  • Venture Corp (SGX:V03)'s FY20 revenue (-17.1% y-o-y due to the COVID-19 pandemic) was deemed in line at 95.3%/97.4% of our/Bloomberg consensus expectations. FY20 net profit also came in within expectations, at 96.5%/97.6% of our/Bloomberg consensus expectations.
  • Venture Corp did well in managing costs in FY20, paring employee costs by 9.6% y-o-y and other operating expenses by 12.4%. Together with product mix changes and better tax efficiency, net profit margin fell marginally to 9.9% in FY20 (vs. 10.0% in FY19).
  • As at end- Dec 2020, Venture Corp’s balance sheet remained in a net cash position (S$928.7m), and it declared a final dividend of S$0.50, bringing its full-year dividend to S$0.75 per share.
  • Working capital also decreased to S$961.6m as at end-Dec 2020 (better receivables collection), against S$1,114.7m as at end-Dec 2019.


Transformation beyond EMS gathering pace

  • Venture Corp continues to progress ahead in its transformation away from a pure electronic manufacturing services (EMS) company. It sees strong growth opportunities in various technology domains.
  • In life sciences, it expects demand for genomics-related products and solutions and advanced equipment for analysis/diagnostic use in biological systems will drive growth in this segment. Venture Corp is also developing devices and solutions in life science technologies, medical devices/equipment, and lifestyle and wellness-related consumer products.
  • Venture Corp will also widen its participation in the robotics, automation, artificial intelligence and advanced semiconductor-related equipment domains. It also sees strong growth potential in the electric vehicle battery industry.

Reiterate ADD as growth expected to return in FY21F






William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-27
SGX Stock Analyst Report ADD MAINTAIN ADD 24.840 SAME 24.840



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......