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Venture Corp - Maybank Research 2022-05-01: One For The Late Cycle Play

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

Venture Corp - One For The Late Cycle Play


Riding a post-COVID recovery; BUY

  • Venture Corp (SGX:V03)'s 1Q22 PATMI of S$84m (+28.6% y-o-y) beat our and consensus estimates, accounting for ~24% of our full year forecast (1Q historically accounts for ~20-22%), driven by broad-based growth.
  • Maintain BUY with unchanged target price (17.2x FY22E P/E) as we see earnings recovery this year towards pre-COVID levels (2019: S$363m) as a catalyst, as this narrative contrasts other tech plays globally where demand slowdown is a key concern.



Broad-based growth drives strong momentum

  • Revenue grew 29.5% y-o-y to S$889.3m on the back of broad-based growth (6 out of 7 domains registered growth). Despite inflationary pressures, PBT margin was healthy at 11.5% (+0.6ppt q-o-q, -0.6ppt y-o-y), which was attributed to Venture Corp’s differentiating capabilities versus competitors and cost control, among others. Effective tax rate rose from 12.9% to 18.0%, primarily due to lower incentives in Singapore after the global minimum tax rate agreement.
  • Within growth domains, advanced payments and healthcare & wellness stood out in 1Q22, largely catalysed by the reinvigoration of retail and hospitality sectors globally amid re-openings.


Living with challenges

  • Venture Corp expects the near-term operating environment to remain uncertain. Amid a still strong demand backdrop, some ways to mitigate supply-side challenges include holding higher levels of inventory to ensure availability of components, and component redesign. For the latter, enabling factors are
    1. having design content many years.


Bright demand outlook






Gene Lih Lai CFA Maybank Research | https://www.maybank-ke.com.sg/ 2022-05-01
SGX Stock Analyst Report BUY MAINTAIN BUY 21.000 SAME 21.000



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