Maybank Securities analyst Jarick Seet is keeping “buy” on Venture Corp with a target price of $20.20, remaining one of his preferred picks for the Singapore technology sector.
In his Jan 31 report, Seet expects Venture’s 4QFY2022 ended December results to be positive as demand from customers remained strong, coupled with a robust order pipeline. He estimates 4QFY2022 revenue of $909 million and PATMI of $95 million with resilient margins.
Venture will release its 4QFY2022 results on Feb 24.
Seet notes that Venture had reported growth across all domains, resulting in 3QFY2022 ended September quarterly revenue that had once again exceeded $1 billion while backlogs orders were still being cleared.
“Even in the semiconductor sector where a slowdown is widely expected by the market, management remains confident its differentiation in capabilities, design and products should enable Venture to experience strong demand from the value-chain where it operates,” he adds.
The company had declared a 1HFY2022 dividend of 25 cents and Maybank expects the final dividend to be 50 cents. This would represent an attractive 4.1% yield for FY2022, Seet highlights. Venture had also made a share buyback to better utilise its $701 million of net cash, he notes.
See also: UOBKH calls Centurion Corp a stock for ‘growth-minded investors’
One of the potential risks to earnings is that the majority of Venture’s revenues are denominated in US dollars, while a larger part of its costs are in Ringgit, followed by Renminbi and US dollars. Due to this, depreciation of the US dollars may impact Venture. However, Seet says that the company already has an effective hedging policy in place.
“While management remains cautious that its business may continue to experience volatility, we believe they will be able to navigate these issues. It will also be shifting towards higher-margin products and solutions,” adds Seet.
As at 10.25am, shares in Venture are trading 7 cents higher or 0.38% up at $18.57.
