Venture Corporation - Maybank Kim Eng 2021-11-05: Tempering Recovery Expectations; Supply Side Problems Drags 3Q21 Recovery

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

Venture Corporation - Tempering Recovery Expectations; Supply Side Problems Drags 3Q21 Recovery

  • Venture Corp (SGX:V03) reported 3Q21 PATMI of S$77m (-4% y-o-y; +2.5% q-o-q) missed due to supply side problems. 9M21 made up 66%/67% of our/consensus full year PATMI.
  • We cut FY21-23E earnings per share forecast for Venture Corp by 9-18% as we believe component-shortage may persist into FY22E.
  • Downgrade Venture Corp to HOLD with lower target price on 17.3x FY22E (0.5 standard deviation above 17-year mean) from 18.5x, as while we are optimistic of earnings recovery, persisting components shortage may limit the pace.
  • Venture Corp's dividend yield of 4% should limit share price downside.



Venture Corp's 3Q21 summary

  • Venture Corp's 3Q21 revenue fell 6% y-o-y but expanded 3.3% q-o-q as shipments in 3Q21 were impaired by sporadic lockdowns particularly in Southeast Asia. This was exacerbated by shortage of critical chips.
  • Net margin was sustained y-o-y and q-o-q at 10%. This is respectable, and suggests that Venture Corp have been successful in passing costs along to customers thus far.


Positive demand commentary



Risks to our view






Gene Lih Lai CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-11-05
SGX Stock Analyst Report HOLD DOWNGRADE BUY 19.18 DOWN 25.130



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