Venture Corp - UOB Kay Hian 2022-04-07: Positive Outlook, Exciting Future Plans & Strengthened Management Team

VENTURE CORPORATION LIMITED (SGX:V03)

Venture Corp - Positive Outlook, Exciting Future Plans And Strengthened Management Team

Venture Corporation has reiterated a bullish outlook, with exciting future plans and a strengthened management team showing clear succession planning in its latest annual report. This is consistent with our BUY call on the back of:
1. robust demand outlook,
2. positive growth guidance from customers that we track, and
3. attractive valuation of 2022F ex-cash P/E of 13x vs its clients’ average P/E of 29x along with a dividend yield of 4.6%.

With over three decades of growth since its establishment in 1989, we believe that Venture Corporation (SGX:V03) is at the crossroads of yet another transformation.
Over the years, it has gained good traction in selected ecosystems of interests, becoming a leading technology partner of choice for over 100 global companies. It manages a portfolio of more than 5,000 products in the space of life sciences, medical equipment, lifestyle and wellness, test and measurement, networking etc. With the post pandemic climate accelerating advancements in selected high-growth technology domains, Venture Corp is excited about the opportunities it can leverage to capture value.

In 2021, Venture Corp made various achievements in new product introductions, including new analytical instruments within the life sciences domain. Growing trends in next-generation sequencing and molecular diagnostics will open up new market potential for its customers and Venture Corp hopes to support them in these new market segments.
In the lifestyle and wellness technology domain, Venture Corp is supporting the launch of a new platform of next-generation devices which are expected to come to market in 2022.
Positive market momentum is also visible in other domains, where Venture Corp has a strong foothold, namely instrumentation, test & measurement, networking & communications, advanced industrials, and semiconductor-related equipment.

In Nov 21, Venture Corp announced changes to its executive leadership team. Effective 1 Jan 22, Mr. Wong Ngit Leong has stepped down as CEO while remaining as Executive Chairman of the Board. Lee Ghai Keen, who is appointed CEO, has been with Venture Corp for segments.

As of end-21, Venture Corp recorded net cash of S$808m (accounting for about 15% of its current market cap) and led the pack of US-listed peers which were mostly in net debt positions. More importantly, Venture Corp has consistently paid the same amount of dividends or better than that in the preceding years. See Venture Corp's dividend history.
Positive guidance of Venture Corp's key customers:
- Broadcom: Expects 1Q22 revenue growth of 14% y-o-y.
- NCR: 2022 guidance of 12-15% y-o-y revenue growth and 27-39% y-o-y EPS growth.
- Agilent: 2022 guidance of 7% y-o-y revenue and EPS growth.
- Fortive: Expects 2022 revenue growth of 7% y-o-y.
- Keysight: Expects 2022 revenue growth of 5% y-o-y.
- Illumina: Expects 2022 revenue growth of 14-16% y-o-y.
- Waters: Expects 2022 revenue growth of 6% y-o-y.
- Philip Morris: Expects 2022 revenue growth of 4-6% y-o-y and EPS growth of 8-11%.

John Cheong UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-04-07

SGX Stock Analyst Report BUY MAINTAIN BUY 22.800 SAME 22.800