Venture Corp
Price targets:
DBS Group Research ‘buy’ $16.90
CGS International ‘add’ $15.93
Maybank Securities ‘buy’ $15.80
UOB Kay Hian ‘buy’ $16.37
No surprise, outlook remains bright
Most analysts have kept their calls on Venture Corp following FY2023 earnings that did not throw up any surprises. Despite lower earnings, Venture has maintained its final dividend at 50 cents, bringing the full-year payout to 75 cents, implying a yield of 5.3%.
In his Feb 23 note, Maybank Securities’ Jarick Seet, citing management, flags that the 2HFY2024 ended December should be “stronger” than 1HFY2024 as production of new products starts. Venture is also confident it can maintain net margins between 8% and 10% for FY2024.
The company continues to see “significant” growth opportunities in life sciences, test instrumentation, data centres, semiconductor equipment, and advanced industrial, networking and communications. In 1QFY2024, Venture has also launched luxury lifestyle and wellness products.
Even as Seet has kept his “buy” call, he has raised his target price to $15.80 from $15.50, pegged to an unchanged 16 times forward FY2024 earnings to consider revised earnings estimates.
On their part, John Cheong and Heidi Mo of UOB Kay Hian have maintained their “buy” call and $16.37 target price on the stock. They note that Venture is expanding its services, including design, sourcing and supply chain management. “This will deepen collaboration with many of Venture’s class-leading customers,” say the analysts in their Feb 23 note.
William Tng of CGS International calls the company a “free cash flow generator” as it has no borrowings and sits on a record cash hoard of $1.06 billion while free cash flow hit a record $473.9 million.
Like Seet, Tng has slightly raised his target price to $15.93 from $15.90 after he projected higher earnings per share to consider a smaller share base following a series of share buybacks. His valuation multiple is kept at 14.6 times.
Ling Lee Keng of DBS Group Research is more bullish than her peers. In her Feb 23 note, she flags how Venture can capture new opportunities with its diversified product mix and bluechip customer base.
With an eye on the longer term, Venture continues to invest and develop new differentiating capabilities across multiple technology domains, she adds.
Her new target price of $16.90, from $15.10 previously, is based on 16 times FY2024 earnings, which, thanks to the improving outlook, is a higher multiple versus 14 times previously. —