VENTURE CORPORATION LIMITED (SGX:V03)
Venture Corporation - Risk Reward Improves; Upgrade To BUY As FY22e Growth Accelerates
- Venture Corp’s 2H21 PATMI of S$171.7m (+3% y-o-y, +22.3% q-o-q) met the street’s expectations and beat ours.
- We raise our FY22-23E PATMI forecast for Venture Corp by 10% as supply side bottlenecks are easing faster than we expected. This, coupled with a robust demand outlook, should catalyse an acceleration in earnings growth and help the stock rerate higher.
Sequential recovery in output
- Venture Corp (SGX:V03)'s 4Q21 revenue grew 9.2% y-o-y/ 17.6% q-o-q to S$905.4m. Recovery of production rates drove quarterly growth as VMS enjoyed full worker capacity in 4Q21 in Malaysia, aided by easing components shortages.
- It is noteworthy that 4Q21 net margin was maintained y-o-y at 10.5% (FY21: 10.0%), underscoring Venture Corp’s ability to manage cost and seek productivity gains despite an inflationary environment.
Robust demand outlook
- Venture Corp expects the demand outlook to be shortages remain an impediment in FY22E and could limit Venture Corp’s growth, in our view.
Risk reward has turned positive
- Venture Corp fell only 4% year-to-date, outperforming some 200,000 shares on 8-Nov at an average of S$18.73, which we interpret as a signal of confidence in Venture Corp’s prospects.
- See
- In our view, key risks include
- worsening of supply side problems due to COVID-19 or geopolitical tensions; and/or
- slowdown in global growth that might
- impact the demand outlook.
Gene Lih Lai CFA
Maybank Research
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https://www.maybank-ke.com.sg/
2022-02-27
SGX Stock
Analyst Report
21.00
UP
19.180
