■ Increasingly, customers’ attitude is to “just deal with” the
economic uncertainties compared to earlier caution.
■ Impact from recent M&A among customers expected to
remain beneficial for Venture.
■ Maintain BUY, with unchanged forecasts and Street-high TP of
SGD10.25, based on 10% discount to peer average.
Caution among customers earlier this year has turned into positive
attitude as clients are learning to “just deal with it”. Earlier this
year, growth uncertainties in Europe and China had raised concerns
among customers. Management said it is “business as usual” and
added it has not seen any major negative reactions by customers.
Therefore, we remain optimistic on Venture’s business trajectory
The following remain high-growth areas for Venture:
■ Industrial Products – Seeing a good run-rate and looking
positive on a full-year basis. Demand coming from high-end
communications devices that have pioneer tax exemption.
■ Life Sciences – Revenue is becoming quite substantial and
Venture may start to break it out soon as a separate segment.
Margins are also high as production content is R&D-intensive.
■ Networking & Communications – Set to continue to perform,
given growing demand for carrier and non-carrier server and
storage connectivity. Customer M&As may also benefit Venture.
M&A among customers should also remain positive for Venture. This
year, top-20 customer Avago acquired Broadcom and Emulex, which
are also Venture’s networking & communications customers. We
believe they should present opportunities for Venture.
What’s Our View
Maintain BUY with TP unchanged at SGD10.25, based on 18x FY15
EPS, or 10% discount to peer average
. Venture offers close to 7%
dividend yield at this price. We think DPS could be raised back to
SGD0.55 this year. (Read Report)
Source : Maybank Kim Eng Research
Labels: Technology Sector, Venture Corporation