Analysts at CGS International (CGSI) and DBS Group Research are maintaining their “add” and “buy” calls on Venture Corp although the company’s 1HFY2024 ended June results missed their expectations.
For its 1HFY2024, Venture Corp posted revenue and net profit of $1.38 billion and $123.9 million respectively. This forms 42% of DBS’s estimates and 43%/44% of CGSI’s forecasts.
Despite this, DBS analyst Ling Lee Keng highlights Venture Corp’s strong net cash position at $1.19 billion as at June 30 as well as its zero debt. As such, the company is in a good position to capture new opportunities for its next phase of growth, says Ling.
Ling also notes that Venture Corp has a healthy pipeline of new product introduction at different stages across its various tech domains, which should help to drive growth in 2HFY2024 and beyond.
“Additionally, with the majority of its manufacturing facilities in Malaysia (Johor and Penang), the group is well-positioned to support customers seeking to diversify their operations outside of China to mitigate the geopolitical risks,” she adds.
Given the revenue miss, CGSI has reduced its FY2024 revenue forecast by 3.22%, leading to a 4.95% reduction in its FY2024 EPS forecast. Analyst William Tng expects to see a resumption in EPS growth in FY2024-FY2026 as customers’ orders pick up as well as share price support from its 5.21% dividend yield.
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Tng’s target price has been raised slightly to $15.95 from $15.93 previously as the share base was reduced by 0.11% on share buybacks and cancellation of some shares repurchased.
DBS, however, has trimmed its target price to $16.40 from $16.90 previously based on about 16 times P/E on blended FY2024/FY2025 earnings.
As at 11.20am, shares in Venture Corp are trading 75 cents lower or 5.2% down at $13.65.
