GRAND VENTURE TECHNOLOGY LTD (SGX:JLB)
Grand Venture Technology - On A Grand Venture
- Grand Venture Technology’s 1Q21 net profit (voluntary business update) was 41.1% of our FY21F net profit, driven by strong growth in its semiconductor segment.
- Grand Venture Technology’s FY21-23F net profit could grow 23-136% driven by higher revenue as the group gains new customers/products and does more assembly business.
- Reiterate ADD with a higher S$1.12 target price.
Grand Venture Technology's 1Q21 net profit grew 435% y-o-y
- We provide an update on Grand Venture Technology (SGX:JLB) post its 1Q21 voluntary business update on 10 May. This is the first time Grand Venture Technology has issued a voluntary business update since its listing on SGX on 23 Jan 2019.
- Revenue growth of 59.0% y-o-y was driven the 68.5% y-o-y rise in revenue from the semicon segment (70.6% of revenue). The life sciences segment (16.5% of revenue) saw 38.4% y-o-y growth and the electronics, medical & others segment (12.9% of revenue) saw 42.2% y-o-y revenue growth.
- Grand Venture Technology's net profit grew 434.9% y-o-y to S$3.3m, achieving 41.1% of our FY21F. This is also higher than 1H20’s net profit of S$2.2m. The strong performance in its semicon segment was driven by the global ramp-up in demand for semiconductor chips while the life science segment benefited from higher production upon receiving customers’ qualification. In the electronics, medical and others segment, Grand Venture Technology benefitted from contribution from a customer involved in surgical microscope.
Committed to growth
- Grand Venture Technology remains committed to growing its businesses. Recall that no vendor shares were sold in its Jan 2019 IPO. With S$23.5m net proceeds from its Mar 2021 placement to Novo Tellus, Grand Venture Technology will continue to seek growth via M&As and increase its competencies in advanced manufacturing techniques, including the ability to machine advanced materials such as quartz and ceramics.
A new chapter unfolds
- We believe a new chapter of growth is unfolding at Grand Venture Technology. Efforts to onboard new customers and products in the past two years are starting to bear fruit in FY21 (as evidenced by the 1Q21 revenue jump and further sub-classification of non-semiconductor related revenues into the life sciences segment and a separate electronics, medical and others segment versus a single segmental classification in the past 2 years). Hence, we raise our FY21-23F revenue by 38.5-42.4% as Grand Venture Technology gains new customers/products and progresses to more assembly work, leading to 81.0-97.5% increases in our FY21-23F EPS forecasts. This in turn drives ROEs higher leading to a higher Gordon-Growth derived P/BV multiple of 5.37x (previously 3.31x).
- Our target price for Grand Venture Technology, based on FY21F book value per share of S$0.209, is raised to S$1.12, versus S$0.605 previously.
- See
- Key risks are shortfalls in our revenue forecasts due to work stoppages at factories run by Grand Venture Technology or its customers due to measures to contain the COVID-19 pandemic.
- Re-rating catalysts are stronger-than-expected results and accretive M&As.
William TNG CFA
CGS-CIMB Research
|
https://www.cgs-cimb.com
2021-05-21
SGX Stock
Analyst Report
1.12
UP
0.605
