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Venture Corporation Ltd - A developer of next generation products

Shared By Stock Fanatic on Wednesday, March 14, 2018 | 14.3.18

● Growth partly driven by a next-gen consumer device. We believe that one other product (aside from genome sequencing machines) that has partly contributed to its strong growth was due to the launch of a next-generation consumer device – iQOS.

● We expect iQOS to contribute ~14% of revenue in FY18. According to PMI’s management, iQOS device contributed ~US$160/900 mn to PMI’s sales in FY16/17. Based on our estimates, ~3 mn and ~11 mn units of iQOS device was sold in FY16/17, and we expect ~20/23/26 mn units of iQOS device to be sold in FY18/19/20. We believe that iQOS contributed ~S$421 mn or 11% of Venture’s overall revenue in FY17.

● Not a one-trick pony. Aside from iQOS and Novaseq, we believe that Venture likely has other businesses that are displaying strong growth too, given that the T&M/Med segment excluding Novaseq and iQOS grew 54% YoY in FY17, based on our estimates.

Stay OUTPERFORM. We like Venture as it would launch more next-gen products that will drive growth with better margins. Net cash position of S$721.6 mn as of 4Q17 represents ~33% of NAV.

Estimating revenue contribution of iQOS
Based on our estimates, we believe that iQOS contributed ~S$421 mn or 11% of Venture’s overall revenue in FY17, and we expect iQOS to contribute ~14% of revenue in FY18.

Not a one-trick pony
While the growth from iQOS was very strong in FY17 (+227% YoY based on our estimates), we also like to highlight that we believe Venture likely has other businesses that are displaying strong growth too, given that the T&M/Med/Lifescience segment excluding Novaseq and iQOS grew 54% YoY in FY17. For FY18, we expect the segment to grow at 13% YoY, with contribution from Novaseq to grow 23% YoY and iQOS to grow 49% YoY.

Technical Analysis
Daily Chart
We draw comfort from a positive sales outlook trend in Venture's notable customers. In FY15, only six of the 14 customers listed below experienced positive top-line growth. However, based on IBES estimates, the number of customers experiencing positive top-line growth will increase to 12 (out of 14) in FY18. We believe that Venture will be an eventual beneficiary from the improved sales outlook of its customers. (Read Report)

Source : Credit Suisse Asia Pacific Equity Research


Posted on Wednesday, March 14, 2018 | 14.3.18
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