- BUY Entry 17.52 – Target – 18.50 Stop Loss – 17.00
- Venture (VMS) is a global provider of technology services, products and solutions with established capabilities spanning marketing research, design and development, product and process engineering, design for manufacturability, supply chain management, as well as product refurbishment and technical support across a widely diversified range of high-mix, high-value and complex products. Venture has built know-how and intellectual property with expertise in several technology domains. VMS manages a portfolio of more than 5,000 products and solutions and continues to expand into new technology domains through its collaborations with customers and partners in selected ecosystems of interest.
- Key customer, Philip Morris International reported “excellent 2Q22 IQOS performance”. One of VMS’s key clients, Philip Morris International (PMI US) reported better-than-expected 2Q22 earnings and increased its expected growth rate for earnings. During the quarter IQOS, a VMS-linked product, saw more than 1.1m pro forma user growth, which underpinned pro forma smoke-free net revenues growth of 10.3% YoY to US$4.3bn. PMI also saw continued success of its IQOS Iluma in Japan with strong acquisition and conversions.
- After posting strong 1Q22, supply chain issues mitigated. Recall that VMS posted stronger-than-expected 1Q22 earnings of S$84m with six out of seven domains recording growth due to strong customer demand. Additionally, VMS also saw improved ability to overcome supply chain disruptions on several initiatives from its R&D labs. Management also highlighted that based on its customers’ orders and forecasts, VMS anticipates a steady demand outlook across its various technology domains such as Lifestyle & Wellness, Life Science, Instrumentation, Test & Measurement Technology and Advanced Industrial domains. Recent new product launches have been well received by end-customers and have contributed to additional growth.
- FY22F results to mark a YoY bounce. The Street currently has 11/2/0 BUY/HOLD/SELL ratings and an average TP of S$21.29. Based on consensus estimates, FY22F revenue/operating profit should jump 12.7%/15.4% YoY to S$3.5bn/S$407.5m respectively. The will in turn push FY22F EPS to 12.6% higher. In line with this, the street is expecting FY22F DPS to expand 3.1%YoY to 77.3¢ (FY21: 75¢) implying a fairly attractive yield of 4.4%. At current prices, VMS would trade at 14.6x forward P/E, more than 0.5sd away from its 2-year average of 15x. VMS is due to announce 1H22 results on 5 August after trading closes.

