Venture Corporation - OCBC Investment 2021-03-02: New Year, New Hopes

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

Venture Corporation - New Year, New Hopes

  • Venture Corp's FY20 net profit in-line; good cost control for the year.
  • Looking forward to growth in its Life Science Technologies domain; potential opportunities in Battery Electric Vehicles.
  • Fair Value of S$22.25 (previously S$22.30).



Capping the year off with robust 4Q20 net profit margin

  • Venture Corp (SGX:V03)’s 4Q20 revenue fell 11% y-o-y to S$829m, while increasing 1% q-o-q.
  • FY20 saw Venture Corp keeping a lid on costs, with employee benefits expense down ~10%, and other operating expenses down ~12%.
  • 4Q20 net profit came in at S$87m, with FY20 net profit coming in at S$297m, broadly in-line with consensus. 4Q20 net profit margin came in at 10.5%, which we understand is on the back of a combination of higher R&D value capture, improvement in sales and a lower effective tax rate.
  • Venture Corp has declared a full-year dividend of S$0.75 per share (2019: S$0.70).


New areas of growth

  • Looking forward, we believe new products introductions are on track for launch in 2Q21 and through 2H21. Venture Corp has highlighted that expected demand for genomics-related products and solutions and advanced equipment for analysis/diagnostic use in biological systems will drive growth in its Life Science Technologies domain.
  • We note that COVID-19 has presented opportunities in the development of pandemic-related testing and diagnostic products and solutions. Venture Corp notes that it will increase its participation and tap into the growth of Robotics, Automation and Artificial Intelligence, and Advanced Semiconductor-related Equipment domains. Venture Corp is also optimistic about opportunities in adjacent domains, such as the Battery Electric Vehicle industry.
  • Still, we believe that one potential form of near-term downside risks could come from product delays arising from the ongoing chip shortage.

Fair value estimate of S$22.25






Carmen Lee OCBC Investment Research | https://www.iocbc.com/ 2021-03-02
SGX Stock Analyst Report BUY MAINTAIN BUY 22.25 DOWN 22.300



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