Venture Corporation - Phillip Securities 2022-11-06: Revenue Close To Record Levels

VENTURE CORPORATION LIMITED (SGX:V03)

Venture Corporation - Revenue Close To Record Levels

Venture Corp (SGX:V03)'s 9M22 PAT was within expectations at 71% of our FY22e forecast. 3Q22 PAT jumped 27% y-o-y to S$97.4mil. The improvement was in part due to lockdowns in Malaysia a year ago.
Only selected financials are provided in the 3Q22 update. Venture Corp said that growth was across all sectors. We believe the strong US dollar was another tailwind to growth.
We lift our FY22e revenue forecast for Venture Corp by 4% but maintain earnings as we lower margin assumptions. Our BUY recommendation and target price for Venture Corp is unchanged at S$20.80, based on 16x P/E FY22e.

Venture Corp’s dividend yield and valuation are attractive. However, we are cautious for FY23e and lower our revenue growth rate to 3% (previously 7%). Macro uncertainty may push customers to turn cautious on their forward orders.

Revenue growth was broad-based across all verticals. The S$1bn revenue per quarter is back to FY17 levels and the 2nd highest for a September quarter.

Inventory is up S$345mil y-o-y to S$1.25bn. The jump is to cater to rising sales demand and buffer for any supply disruptions. Another drag to earnings was the higher effective tax of 18% in 3Q22 (3Q21: 12.6%) due to lower tax incentives.

Venture Corp is expanding capacity in Malaysia to cater to improving demand. The trend to outsource more production into SE Asia away from China is a multi-year tailwind for Venture. However, macro uncertainty could dampen customer orders in the near term.
Maintain BUY recommendation on Venture Corp with a unchanged Target price of S$20.80.
Our FY22e revenue forecast for Venture Corp is increase by 4% but net margins lowered on declining gross margins and higher effective tax rate.
See

Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2022-11-06

SGX Stock Analyst Report BUY MAINTAIN BUY 20.800 SAME 20.800