Grand Venture Technology Ltd - CGS-CIMB Research 2021-06-10: 1H21F Net Profit To Grow More Than 50% Y-o-y

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GRAND VENTURE TECHNOLOGY LTD (SGX:JLB)

Grand Venture Technology Ltd - 1H21 Net Profit Expected To Grow More Than 50% Y-o-y

• Global semiconductor sales grew 21.7% y-o-y in Apr. WSTS has also raised its 2021 semiconductor sales growth forecast to 19.7% (previously: 8.4%).
• We believe Grand Venture Technology is a beneficiary of the strong semiconductor sales forecast for 2021 (the semiconductor segment was 71% of Grand Venture Technology’s 1Q21 revenue).
• Reiterate ADD with an unchanged S$1.12 target price. 1H21F results are set for a mid-Aug 2021 release.

Reiterate ADD on Grand Venture Technology

• We reiterate our ADD call and target price of S$1.12 on Grand Venture Technology (SGX:JLB). This is based on a Gordon- Growth derived P/BV multiple of 5.37x (unchanged) on FY21F book value per share of S$0.209.
• 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.

Global semiconductor sales grew 21.7% y-o-y in Apr

• The Semiconductor Industry Association China (+2.3%) and Europe (+1.6%). On a year-on-year basis, chip sales increased in China (+25.7%), Europe (+20.1%), Japan (+17.6%), and the Americas (+14.3%).

WSTS ups 2021 worldwide semiconductor sales forecast

• Industry trade group World Semiconductor Trade Statistics (WSTS) has also released its Spring 2021 global semiconductor sales forecast, which projects the industry’s worldwide sales at US$527.2bn in 2021, a 19.7% (previously 8.4%) increase from the 2020 revenue of US$440.4bn.
• WSTS projects year-on-year increases in Asia Pacific (+23.5%), Europe (+21.1%), Japan (+12.7%), and the Americas (+11.1%). In 2022, WSTS expects the y-o-y revenue growth rate to taper to 8.8%.

Manageable impact from Malaysia’s MCO 3.0

• See
  • Grand Venture's Share Price,
  • Grand Venture's Target Price,
  • Grand Venture's Analyst Reports,
  • Grand Venture's Dividend History,
  • Grand Venture's Announcements,
  • Grand Venture's Latest News.
• On 3 Jun 2021, Grand Venture Technology announced that the group had obtained a permit from Malaysia’s Ministry of International Trade and Industry to foresee any material impact of MCO 3.0 on our FY21F forecasts for Grand Venture Technology.

William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-06-10

SGX Stock Analyst Report ADD MAINTAIN ADD 1.120 SAME 1.120