SINGAPORE (Oct 12): OCBC Research is maintaining its “buy” recommendation on Venture Corporation while raising its fair value estimate to $20.33 from $14.80 to factor in a stronger 2H for the group’s FY17 earnings.
The move from OCBC comes in anticipation of continued strong margins expansion and higher sales, given how Venture Corp has recorded double-digit y-o-y growth in PATMI over the past eight quarters, including a 61% surge in its most recent 2Q17 PATMI.
“Since FY12, Venture Corp has consistently posted stronger 2H results compared to 1H, as its customers increase spending nearer to end of each calendar year, and we expect this trend to continue in FY17. Hence, based on above, we are raising our FY17–FY21 PATMI forecasts by 10% 15%,” says lead analyst Eugene Chua in a Thursday report.
The research house is projecting FY17 and FY18 PATMI of $260.5 million and $301.3 million, respectively.
Noting how the group’s CEO, Wong Ngit Liong, has made open market share purchases on numerous occasions this year, Chua believes these transactions provide a “very clear positive signal” of the CEO’s confidence in the company's performance.
“Given its outstanding results for the past few quarters, solid balance sheet and sanguine outlook, we believe there is much scope for Venture Corp to potentially increase its dividend, which has ranged between $0.50 to $0.55/share since FY08,” says the analyst.
As at 11.44am, shares in Venture Corp are trading 14 cents lower at $18.41 or 17.2 times FY18 forward earnings.
