GVT guides 1H24F revenue of S$58m-64m
- FY23 revenue of S$111.3m (-15.1% yoy) was 3.0%/2.0% above our/Bloomberg consensus’ forecasts.
- FY23 net profit of S$5.5m (-58.4% yoy) was 2.7%/5.2% below our/Bloomberg consensus’ forecasts.
- Reiterate Add (unchanged S$0.62 TP) as we expect the semicon industry recovery to drive GVT’s net profit recovery over FY24-26F.
FY23 net profit fell 58.4% yoy
Grand Venture Technology’s (GVT) FY23 revenue fell 15.1% yoy to S$111.3m (3.0%/2.0% above our/Bloomberg consensus’ forecasts), mainly due to the slowdown in the semicon industry, which led to a 26.6% yoy drop in GVT’s semicon revenue. Its other business segments’ revenue were largely unchanged in FY23. Lower utilisation rates and higher operating costs arising from investments to secure business with new front-end semicon customers led to a 58.4% yoy decline in FY23 net profit to S$5.5m (2.7%/5.2% below our/Bloomberg consensus’ forecast). A final DPS of 0.1Scts was declared.
GVT targets 1H24F revenue to be S$58m-64m
In its FY23 results commentary, GVT provided a target revenue of S$58m-64m in 1H24F (+7.7-18.8% yoy). According to management, the group is starting to see an easing of excess inventory and expects order momentum to pick up towards FY24F. GVT believes that the mid- and long-term outlook of the semiconductor industry’s prospects remain strong on the back of rapid investment and innovation in artificial intelligence and its applications. Management said that GVT is continuing to make strides in onboarding its front-end semiconductor customers in the metrology, inspection, etch and wafer deposition segments. It is also working on several first-article inspections for its semiconductor and life sciences customers. Meanwhile, the group will maintain a prudent approach in its cost and operations management.
Reiterate Add on net profit recovery
As GVT’s semicon recovery remains 2H24F loaded, we reduce our FY24F revenue expectations by 14.9%, leading to a 19.6% decrease in our EPS forecast. For FY25F, we lower our revenue forecast by 8.7% but expect gross profit margin to improve by 2.48% pts; hence, our FY25F EPS forecast is unchanged. We reiterate our Add call on GVT as we think the worst is over and net profit growth should resume over FY24-26F. Our TP of S$0.62 is based on FY25F P/E of 11.6x, the average P/E multiple in its last net profit upcycle (FY19-21). Downside risks to our Add call: 1) the expected semicon industry recovery not materialising over FY24-25F, 2) sluggish demand from customers, and 3) orders from new front-end customers not materialising or further delayed. Re-rating catalysts: 1) potential new customer wins with significant purchase orders, 2) accretive M&As, which could raise GVT’s revenue over FY24-25F resulting in higher net profits, and 3) a quicker-than-expected return of customer demand.
