Coping with supply-side disruptions, while demand remains strong
Venture reported 2Q21 PATMI of S$75.1 mn, taking 1H21 PATMI to S$140.4 mn, broadly in line at 41%/38% of consensus/CS expectations, given expectations of new product introduction in 2H21.
Venture’s Malaysia operations have been largely unaffected by the EMCO, while >80% of its Malaysia-based employees are expected to receive their first vaccination dose by 3Q21. Consequently, we expect Venture to continue to see sequential growth into 2H21.
Venture highlighted that it has not been able to fulfil all orders due to the global components shortage. However, despite the global components shortage, 1H21 net margin was 9.8% as Venture was able to mitigate the impact through its sourcing network, support from customers and the redesign of components/parts.
Maintain OUTPERFORM. We lower our TP to S$22.0 (from S$22.5) and FY21-23E EPS by 7-12% to account for supply-side disruptions, but remain positive on NPI in 2H21 and strong broad-based demand outlook. Venture trades at 14x FY22 P/E and is S$922.2 mn net cash as of Jun-2021, supportive of its 3.9% FY21E dividend yield. S$0.25 interim dividend was declared (flat YoY).