With 1HFY2022 net profit 21% below expectations, CGS-CIMB Research analyst William Tng has slashed his target price for Grand Venture Technology by 34%.
The homegrown precision manufacturing solutions provider posted net profit of $7.1 million for the 1HFY2022 ended June, down 16.2% y-o-y. The net profit was 21% below Tng’s $9.0 million forecast.
Revenue, meanwhile, increased by 25.3% y-o-y to $67.0 million due to higher sales across the group’s three segments.
In an Aug 11 note, Tng is maintaining “add” on Grand Venture Technology with a lower target price of 85 cents from $1.29 previously.
Grand Venture Technology also cut interim distribution per share to 0.3 cents from 0.5 cents in 1HFY2021.
Established in Singapore in 2012, Grand Venture Technology is a manufacturing solutions and services provider for the semiconductor, analytical life sciences, electronics and other industries.
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The company operates out of its facilities in Singapore, Malaysia (Penang) and the PRC (Suzhou).
“Although management sees robust demand across all its business segments in 2HFY2022F, it is mindful that the headwinds faced by some of its back-end semiconductor customers may cap the group’s growth in the near term,” writes Tng.
The group hopes to mitigate this with its expansion into the front-end semiconductor business.
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Grand Venture Technology updated that engagement with prospective customers is “progressing well”, says Tng. Onboarding these new customers is expected to mitigate the softening demand situation from back-end semiconductor customers, he adds.
In the life sciences segment, the company expects demand to remain resilient given the typically long life cycles of the customers’ products, writes Tng. “Grand Venture Technology is also addressing the rising cost environment via further automation and passing on some of the cost increases to customers.”
Tng is cutting his FY2022-FY2024 earnings per share (EPS) forecasts by 31.4%-34.7% as the company navigates the “difficult operating environment”.
As at 10.55am, shares in Grand Venture Technology are trading flat at 70 cents, down 40.68% year to date.
