Venture Corp

Price target:

RHB “buy” $22.80

Venture’s 1Q expected to be positive, keep ‘buy’

RHB Group Research analyst Jarick Seet has maintained his “buy” rating and an unchanged target price of $22.80 on Venture Corp. Seet, in his April 26 note, expects the leading manufacturing services provider to enjoy a “positive” 1QFY2022 ended March, as it works through its backlog from the preceding 4QFY2021, where demand remains strong while component shortages, which had held back growth, continues to ease. “FY2022 will enjoy a stronger performance than the one in the previous year,” writes Seet, who is expecting Venture to report earnings of $78 million to $82 million for 1QFY2022. In contrast, for 1QFY2021, Venture reported earnings of $65.3 million.

While overall supply chain issues have eased, there are still pockets of shortages more pronounced than others, such as so-called Field Programmable Gate Arrays (FPGA) — a form of integrated circuit that can be configured and widely used in different products used in medical, defence and wireless communications.

Venture has been dealing with the component shortages in a couple of ways. For example, its strong R&D team has managed to redesign products that can get by without requiring parts that are lacking. The company has also been able to buy more components from both existing and new suppliers. This allowed Venture to grow more revenue than before.

Seet, citing customer orders and forecasts, notes that Venture anticipates broad-based demand across semiconductors, life science, instrumentation, test and measurement, networking and communications as well as advanced industrials, where several new product introductions are expected. Customers in the lifestyle and wellness sectors also have provided positive demand guidance, adds Seet. — Lim Hui Jie