UOB Kay Hian Group Research analyst John Cheong has kept a “buy” rating on Venture Corporation with a target price of $22.80.
Venture Corporation’s FY2021 ended December 2021 results highlight that it expects a “robust demand outlook” based on customers’ orders and forecasts across various technology domains, according to Cheong. Some key areas of potential include the life science domain, where the demand for products in the area of analytical instruments remains strong, in addition to next-generation sequencing in research and development (R&D) labs being engaged in are driving demand.
As at end 2021, Venture Corporation recorded net cash of $808 million, which accounts for about 15% of its current market capitalisation, as compared to its US-listed peers, of which many were in net debt positions. More importantly, Venture Corporation has been consistent in its dividend payouts, as it has been dishing out the same amount of dividends or better than that in the preceding years.
Additionally, positive market momentum is observed across instrumentation, test and measurement, networking and communications, as well as advanced industrials domains, where several new product introductions are expected.
Customers also appear to be guiding for revenue growth for 2022, in the range of 5%-16% y-o-y. “We believe Venture Corporation could capture higher growth than its customers’ revenue growth, given its ability to provide customised solutions for new product launches and entrance into new high growth domains including semiconductor and electric vehicles,” Cheong says, while noting that customers specifically in the lifestyle and wellness sectors have provided a positive outlook.
Moreover, Hon Hai, notable for being the largest assembler of iPhones, has noted that a major improvement in part shortages is likely to only be in the first quarter, with supply constraints on a whole expected to ease in the second half of the year.
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In addition, further easing of global border restrictions should help to improve the component shortage issues, from easier access to labour and reduction of air freight rate.
To be sure on the group’s positive momentum, its executive chairman Wong Ngit Leong has been purchasing shares in Venture Corporation. On Nov 8, 2021, Wong, who is also the largest shareholder, increased his holdings by 200,000 shares at $18.73 per share. Previously, his acquisition of 566,300 shares at an average price of $14.45 per share from July to September 2017 turned out to be a strong positive signal as the stock’s share price hit an all-time high of $29.50 in April 2018.
On a whole, Cheong remains positive on Venture Corporation’s long-term growth as it moves forward with collaborating with successful and innovative customers in various high-growth and fast expanding market segments.
As at 10.05am, shares in Venture Corporation are trading at 2 cents higher or 0.11% up at $17.75. The stock is trading at a FY2022 P/B ratio of 1.8x and dividend yield of 4.5%.
