A year of recovery
? FY21 results were in line with our/Bloomberg consensus full-year expectations as operations normalised in 4Q21.
? Despite the operating challenges, the company continued to work on defending its pretax and net profit margins (FY21: 11.6%/10.0%).
? A final DPS of S$0.50 (unchanged yoy) was declared. Reiterate Add with an unchanged TP of S$23.32 as EPS growth (15.2% yoy) returns in FY22F.
Strong rebound in 4Q21
FY21 revenue grew 3.1% yoy to S$3,107.5m and was in line with our/Bloomberg consensus expectations at 98/101% of full-year forecasts. Net profit grew 5.0% yoy to S$312.1m and was in line with our/Bloomberg consensus expectations at 101% of full-year forecasts. Revenue rebounded 17.6% qoq as operations normalised in 4Q21, leading to a 22.0% qoq increase in net profit. A reduction in R&D expenses (-46.4% yoy) and a foreign exchange gain of S$4.2m helped improve net profit margin to 10.0% in FY21 versus 9.9% in FY20. A final DPS of S$0.50 was declared. Inventory grew from S$961.6m as at end-Dec 20 to S$1,235.1m as at end-Dec 21 to support customers’ orders in FY22F.
Management is positive on FY22F outlook
For FY22F, the company anticipates robust demand outlook based on its customers’ orders and forecasts across various technology domains that the company is involved in. In the Life Science domain, the demand for products in the area of analytical instruments remains strong. Venture also noted good growth prospects in the Next Generation Sequencing and other breakthrough technologies that its R&D Labs are engaged in. The company also commented that positive market momentum is also visible across
Instrumentation, Test and Measurement, Networking and Communications, as well as Advanced Industrials domains, where several new product introductions are expected. Customers in the Lifestyle and Wellness sectors have also provided positive outlook regarding their demand schedule for the year.
Reiterate Add
Our FY22-23F forecasts are unchanged and we introduce FY24F forecasts. At an unchanged target P/E multiple of 17.3x (0.5 s.d. above its 20-year average of 15.1x) on FY23F EPS, our TP is unchanged at S$23.32. Re-rating catalysts are new product launches by customers and improvements in component availability. The key downside risk on earnings is the ongoing supply chain disruptions which affect the availability of parts and components. Other potential headwinds include the emergence of new Covid-19
variants which may impact macroeconomic activities and potential disruptions/impact from the current Ukraine-Russia conflict.