? We present the key highlights from Venture’s 2022 annual report released on 5 Apr 2023. Its AGM is scheduled for 27 Apr 2023.
? We think Venture could release its 1Q23 business update on 27 Apr 2023. 1Q23F net profit could fall 6.9% yoy and 20.2% qoq to S$78.2m, in our view.
? We reiterate our Add call with a TP of S$20.10.
Key highlights from 2022 annual report
We reviewed Venture’s 2022 annual report and noted the following key highlights. 1) In 2022, Philip Morris International, one of Venture’s key customers, presented the company with two prestigious awards, namely, “The Chief Procurement Officer (CPO) Award” and a special recognition for “Achieving the Milestone of 60m Devices Shipped”. 2) Strategy-wise, Venture commented that the group will continue to constantly innovate, transform and evolve. In the Life Science & Genomics technology domain, Venture commented that since 2013, it has built in-depth product knowledge to support the manufacturing of a wide range of equipment in liquid chromatography, mass spectrometry, spatial transcriptomics and digital PCR. These instruments are used widely in food/water quality testing, research on infectious diseases and development of medical drugs, amongst others. In its 2022 annual report, Venture highlighted that an emerging longevity industry has led to the development of an interdisciplinary ecosystem including wearables and robotics, lifestyle consumer tech and AI-based diagnostics which represents exciting growth opportunities for the group. 3) In the same report, Venture
also commented that it sees strong tailwinds in sectors such as electric vehicle ecosystem, renewable energy infrastructure, industrial IOT, 5G and cloud. 4) Its 2022 annual report also updated that the group is on track to complete the construction of a new 442,000 sq ft manufacturing facility in Batu Kawan Industrial Park, Penang, Malaysia by end-2023F.
1Q23F typically a seasonally weaker quarter
Over the past 10 years (2013-22), 1Q was typically a seasonally weaker quarter qoq due to Lunar New Year holidays as well as a typically stronger 4Q seasonality in the industry. We think 1Q23F revenue could have increased by 2.4% yoy but fell 12.9% qoq to S$910.4m while net profit could be S$78.2m (-6.9% yoy, -20.2% qoq). Over 2013-22, 1Q accounted for 23.1% of full-year revenue and 21.0% of full-year net profit.
Reiterate Add with a TP of $20.10
Our TP remains at S$20.10, based on a 22-year average forward P/E of 15.2x our FY24F EPS forecast. Reiterate Add given its 4.22% dividend yield and still growing EPS. Rerating catalysts are new product launches by customers and improvements in component availability. Key downside risks are a) the ongoing supply chain disruptions, which affect the availability of parts and components, b) labour shortages (which could potentially lower its production output), and c) weakening global economic outlook (which could potentially reduce orders from customers).