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Simons Trading Research

Author: simonsg   |   Latest post: Fri, 20 May 2022, 9:46 AM

 

Venture Corporation - Overcoming Components Shortages

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Venture Corp's 1H21 in Line on Softer Seasonality Assumptions

  • We deem Venture Corp (SGX:V03)'s 1H21 PATMI of S$140.4m (+7.5% y-o-y) to be in line as we were expecting softer 1H21 seasonality than in previous years amid components shortages. However, as we see risks that Venture Corp may not be able to fully fulfil customers’ demand in 2H21, we have trimmed FY21E earnings per share forecast by 4.5%.
  • We largely maintain FY22E earnings forecast as the demand outlook remains robust. We increase target price for Venture Corp to S$25.13, as we roll forward to 18.5x FY22E P/E. BUY.

Well Set Up to Mitigate Most Challenges

  • Venture Corp's 1H21 revenue rose 4.9% to S$1.43b, on the back of strong customers’ orders. However, due to shortage of components, unfulfilled orders are pushed out into 2H21. Net margin inched up 0.2ppt to 9.8%.
  • Venture Corp believes it is well set up to mitigate most challenges precipitated by COVID-19 as it has set up working task forces that are working closely with stakeholders (e.g. customers, suppliers and governments) to overcome this.

Demand Outlook Strong…

  • Key bright areas include Morris’ IQOS ILUMA. Other bright spots include test & measurement, networking & communications, advanced industrials and semiconductor equipment.

… But Components Availability Is Bottleneck

    • Venture Corp has multiple vaccination dose by 3Q21. Management also highlighted that Venture Corp’s SOPs are a result of flouting local rules and laws.

    Source: Maybank Kim Eng Research - 9 Aug 2021

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    Labels: Venture

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    Venture 17.45 +0.26 (1.51%) 942,400 

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