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Venture, Sarine, SGX bear watching as results season approaches

Benjamin Cher Published on Fri, Oct 20, 2017 / 9:12 PM GMT+8

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(Oct 23): As another reporting season approaches, market sentiment towards some of our holdings is riding high. Strong earnings reports for 3QFY2017 could quickly push some of these stocks higher, but any disappointment could lead to an ugly sell-off.

In particular, Venture Corp is up 83.4% since we added it to our portfolio in Jan 4. On Aug 4, the company reported a 41.3% rise in revenue for 1HFY2017 to $1.8 billion and a 49.5% jump in earnings to $118.4 million. According to Eugene Chua, an analyst at OCBC Investment Research, Venture should benefit from a seasonally stronger 2HFY2017. “Since FY2012, Venture has consistently posted stronger 2H results compared with 1H, as its customers increase spending nearer to the end of each calendar year, and we expect this trend to continue in FY2017,” he says in a recent report.

For FY2017, Chua forecasts a 44.1% rise in earnings to $260.5 million, on a 34.3% rise in revenue to $3.8 billion. This strong rise in earnings, if it materialises, could see Venture declaring higher dividends for the year. For FY2016, Venture declared a total dividend of 50 cents a share. “Given its outstanding results for the past few quarters, solid balance sheet and sanguine outlook, we believe there is much scope for Venture to potentially increase its dividend, which has ranged between 50 cents and 55 cents a share since FY2008,” says Chua in the report. The opinion of analysts such as Chua aside, shares in Venture got a strong boost after the company’s chairman and CEO Wong Ngit Liong waded into the market last month. According to a filing, Wong bought 400,000 shares on Sept 12 at $15.26 each. Immediately after the disclosure, the stock jumped 10% on heavy volume, sparking a query from the Singapore Exchange about unusual trading activity. Wong had also purchased 271,600 shares at $12.51 to $12.52 each on July 14 and 17, according to earlier filings.