Going back to pre-Covid-19 levels
? 1Q22 revenue grew 29.5% yoy to S$889.3m and was above our and
Bloomberg consensus’ expectations.
? 1Q22 net profit grew 28.6% yoy to S$84.0m and was also above our and
Bloomberg consensus’ expectations.
? Reiterate Add call and a TP of S$23.32. Management sees steady demand
outlook across its various technology domains.
A good start to FY22F
? Venture Corporation’s 1Q22 revenue of S$889.3m (+29.5% yoy, -1.8% qoq), at
25.8%/26.1% of our/Bloomberg consensus’ full-year forecasts was better than
expected. Over the past 9 years, 1Q accounted for 23.1% of full-year revenue.
? 1Q22 net profit of S$84.0m (+28.6% yoy, -11.2% qoq), at 23.4%/24.3% of
our/Bloomberg consensus’ full-year forecasts was also better than expected. Over the
past 9 years, 1Q accounted for 20.8% of full-year net profit.
? Despite operating challenges, pre-tax profit margin improved yoy to 11.5% in 1Q22
(vs. 10.9% in 1Q21). We think that this is due to higher economies of scale, product
mix and continued good cost control and productivity improvements.
? Effective tax rate rose to 18.0% in 1Q22 (1Q21:12.9%) as Singapore operations
enjoyed fewer tax incentives.
? Despite the higher tax rates, net profit margin was unchanged yoy at 9.5% in 1Q22.
Management positive on FY22F
? Based on customers’ orders and forecasts, Venture anticipates steady demand
outlook across its various technology domains in FY22F. Venture noted that recent
new product launches by its customers have been successful.
? With its strength in R&D, Venture has also been able to mitigate supply chain
disruptions and expand its capabilities to fulfil more orders.
? Although the operating environment remains uncertain, Venture remains optimistic
about its long-term prospects as the group has gained good traction in selected
ecosystems and has become a leading technology partner of choice for many global
players. Going forward, Venture intends to continue investing to participate in new
fast-growing technology domains.
Reiterate Add
? We reiterate our Add call on Venture with a TP of S$23.32, based on an unchanged
target P/E multiple of 17.3x (0.5 s.d. above its 20-year average of 15.1x) on FY23F
forecast EPS.
? Re-rating catalysts are new product launches by customers and improvements in
component availability.
? The key downside risk 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 macro-economic activities
and potential disruptions/impact from the current Ukraine-Russia conflict.