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Venture Corporation - Still seeing positive trends

Shared By Stock Fanatic on Wednesday, June 24, 2015 | 24.6.15

■ 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.

What’s New
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 this year. 

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.

Technical Analysis
Daily Chart
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

Posted on Wednesday, June 24, 2015 | 24.6.15
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