Venture    Last:11.39   -

Venture

Yah, Dont know what happend to this stock. Has lost a couple of thousands just for the last few days.

Thought it has reach bottom and buy in somemore to offset the losses....who knows keep moving south further. Expect it to drop further and buy in later. sigh !

 

Hey, what happened to this stock???? Cheong ah!!!!

 

Some signs of accumulation occuring. Acc/Dist and Chaikin are rising. Wait for actual price trend to follow first.

 

Why specifically $10? 


 

 

buy at $10

 

TA charts look bearish. Acc/Dist and Chaikin are downtrending.

Price is following the lower Bollinger Band closely too. 

 

Deutsche Bank

Venture's stock has been weak over the recent weeks and at current levels the stock offers attractive upside. We believe that Venture's business model potentially offers better resilience in case of a slowdown versus the average contract manufacturing company. Key differentiating factors include:

Focus on high end manufacture: Venture has significant exposure to the industrial segment (over 50% of business). With some of the customers in the industrial segment Venture enjoys single supplier status.

Customer diversification: Venture has over 100 customers, which is large for a company with less than US$3.0bn in sales. Typically a company this size would not have not more than 20 customers

Very diversified product portfolio: Venture executes on a portfolio of over 4000 products, again a company this size will have only about 100-200 products.

Margins best in the industry: Venture's margins (7% at operating level) is perhaps the best in the industry. Returns have recovered over the last few quarters and should continue to improve.

Valuations: Our forecast growth rate of between 10-15% over the next few years we believe is very achievable. Based on today's closing price of S$12.6 the stock trades at of 11.3x FY08 earnings. Given the diversity of customer base, wide portfolio of products and a focus on high end manufacture we believe that the quality of earnings is perhaps the best in the EMS industry. The stock currently has a dividend yield of about 5% and FCF yield of about 9% on FY08 estimates.

 

176lots snapped by at $14.4  at 16:35???!!!! 

 

hi singaporegal,

by TA charts, do you mean chaikin and accumulation/distribution charts?

thank you

 

 

 

Hi Pinnacle,

TA charts still show bearish signs. Let's see what happens in the next few days. I always treat analyst reports with a pinch of salt.  

 

Buy: Strong Results Suggest Sharp Sell-down Is Overdone

Buy/Low Risk 1L

Price (02 Nov 07) S$13.20

Target price S$18.50

Expected share price return 40.2%

Expected dividend yield 4.2%

Expected total return 44.3%

Market Cap S$3,620M

US$2,498M

 Maintain Buy (1L) ? 18% share price decline over the past 1 month due to earnings/CDO concerns appears overdone. 3Q07 results underpin our view that Venture's high margin growth and +FCF strategy is sustainable. A healthy product mix and tight cost control also helped propel EBIT margin to reach 7.7% (+110 bps qoq, +120 bps yoy), and clearly differentiates it from peers.

 CDO ? S$6.9m marked to market losses but mgmt reiterated default risks are low. VMS has no exposure to ABS, but corporate credits (investment grade) and well diversified. Both tranches are due to expire by 2008-09.

 3Q07 review ? Revenue of S$935m (17% yoy, -7% qoq) was below our S$995m est. due to one-time inventory adjustment by a key printing customer but S$76m (+30% yoy, -3% qoq) net profit beat our S$70m forecast, although boosted by $8.5m tax write-back but partially offset by $7m financial losses.

 Price catalysts ? 1) Strong earnings visibility in 4Q07; worries on revenue growth tapering off is mitigated by new product ramping. Test measurement and medical products such as syringe and insulin pump, glucose meter; 2) GES acquisition has entrenched VMS scope of design activities and strong engagement with customers on new POS terminals.

 Valuations ? Stock at 11x 08E P/E is trading at trough valuations, with improving ROE and cash flow. We see little downside to shares and expect 44% upside from current levels.

 

wah!!! so many ppl say buy, it must be good...

 

DBS Vickers - Venture Corporation Still delivering against odds Buy S$13.20 Price Target : 12-month S$ 18.90 Story: Headline net profit of S$76.3m (+29% y-o-y, -3% q-o-q) matched our S$76m forecast as tax writeback and gain on sales of investment amounting to S$9.5m fully offset forex losses and marked-to-market losses for CDOs totaling S$8.4m. Adjusting for all one-off items, net profit rose a robust 33% y-o-y and 9% q-o-q to S$73.5m, still broadly in line with our expectation. Point: Although results were impacted by forex and CDOs, the continuity of earnings growth is commendable. Once again, Venture?s consistent delivery showed that its high margin growth and FCF generative strategy is sustainable. We believe this stock, which has been unduly sold down, should perform better going forward as the CDO crisis blows over and the company continues to gain traction in new market segments where its superior technological/engineering value-add will be a key differentiating edge against global peers. Relevance: Valuations are undemanding at 11.8x FY07 and only 10.7x FY08 earnings. Maintain Buy, with our target price maintained at S$18.90, pegged at 15x PER as we roll over to FY08 earnings.

 

CIMB

Venture Corporation (S$13.20) - 3QFY07 results - Another set of good results

Venture?s reported net profit of S$76.3m (+29% yoy) was 6% and 4% above consensus and our expectations respectively. However, excluding marked-to-market and forex losses, gains on the sale of available investments, and a tax write-back, 3Q07 net profit of S$73.5m was close to our estimate of S$73.7m. 9M07 numbers represent 76% and 72% of consensus and our full-year forecasts, respectively. We have trimmed our full-year forecast by 1%, after lowering our 4Q sales expectations. Our FY08-09 forecasts remain relatively intact as lower sales assumptions have been offset by higher gross-margin expectations. We believe its manageable level of marked-to-market losses in 3Q should alleviate concerns about its CDOs exposure. Maintain Outperform. We believe further sets of healthy results should act as catalysts. Our target price remains S$16.30 (13x CY08 P/E).

 

UOB KH - VENTURE CORPORATION

3QFY07: Creating value for sustainable margins

Venture reported net profit of S$76.3m (+29.4% yoy) on sales of $935.9m (+17.1% yoy). The results were slightly better than our net profit forecast of S$74.4m. Venture incurred marked-to-market adjustment of S$6.9m for investments in collateralised debt obligations (CDOs). This was offset by writeback of tax provision of S$6.7m as the company has extended its pioneer status for production facilities in Singapore and Johor, Malaysia.

Top line affected by inventory adjustment. Revenue grew 17.7% yoy but contracted 6.8% qoq. There was significant impact from one-time rationalisation of channel inventory by a major customer during 3Q07. This has led to a 20.3% qoq decrease in revenue contribution from Printing & Imaging segment to S$237m. Revenue contribution from Retail Store Solutions/ Industrial Products was relatively unchanged at S$228.3m. Top line growth was affected by significant decline of the US$, which weakened from 1.5303 in Jun 07 to 1.4852 in Sep 07 against S$.

Creating value for sustainable margins. EBITDA margin expanded from 19.2% in 3Q06 to 21.5% in 3Q07. Net margin has similarly expanded from 7.4% in 3Q06 to 8.2% in 3Q07. The better margins were achieved through diversification of product and customer base and increase in original design & manufacturing (ODM) activities. Venture creates more value add for customers by providing design and test development services.

Venture generated cash flow from operations of S$175.6m in 3Q07. Its cash holding has increased to S$486.9m and net debt/equity ratio has reduced to 0.06x. The company is moving closer to a net cash position.

Planning long-term expansion within IDR. Venture has added 150,000sf of production floor space in Johor, Malaysia and will renovate the Penang plant to create more production floor space. The company has about 12 buildings within the Iskandar Development Region (IDR). Venture plans to expand within the IDR over the longer term.

Plans to hold CDOs till maturity. Venture invested in two tranche of CDOs embedded with credit derivatives in 2004, which were valued at S$206.1m as at Dec 06. The CDOs are backed by a global portfolio of investment grade corporate bonds issued by companies in a diversified range of industries and geographical markets. There is no exposure to mortgages. Venture received regular interest payments and intends to hold the CDOs till maturity (Jun 08 and Dec 09). The investment represents 11.2% of shareholders? funds.

Reiterate BUY. We like Venture for its defensive qualities (customer relationships for high-mix business are more enduring) and strong free cash flow. Our target price for Venture is S$18.50 or FY08 PE of 15x (Benchmark Electronics: 14.5x, Flextronics 13x, Jabil Circuit 13.8x and Plexus Corp: 16.5x).

 

KIM ENG - Standing Out From the Rest

♦ No fears

Fears of losses related to currency movements and CDO investments had sent the stock plunging since early Oct in the wake of SembCorp Marine?s forex losses. However, those fears did not materialise. Instead, earnings rose 40% for 9M07 to S$225.7m, exactly 75% of our full-year forecast of S$300m. 3Q07 net profit rose 28% YoY to S$76.3m, but following adjustments for forex and CDO marked-to-market losses as well as a tax write-back (following renewal of Singapore pioneer status), we estimate net profit still rose 29% to S$71.7m in 3Q07 (from similarly adjusted net profit of S$55.5m in 3Q06).

♦ Naturally well hedged

The forex loss was a mere S$1.5m, despite the US dollar weakening by 5% against the Singapore dollar during the quarter. Venture was well protected by two natural hedging mechanisms: first, 80% of its production costs are denominated in the greenback; second, forex gains by its Malaysian subsidiaries (where the functional currency is the US dollar and asset base is far larger than Singapore) offset forex losses in Singapore. Venture does not indulge in financial hedging.

♦ Minimal CDO damage

Marked-to-market CDO write-downs also amounted to only S$6.9m. While the largest quarterly negative such item since 2Q05, it was certainly not alarming in the larger context. Management reiterated that its CDOs are investment-grade corporate bonds with no direct exposure to subprime loans/mortgages and with only a small exposure to the US (limited to homebuilding industry). Venture expects to fully recover its host value (its original investment) upon maturity (June 2008 and Dec 2009).

♦ Best yet to come

Revenue growth in 3Q07 could have been stronger if not for the inventory rationalisation of a major customer. However, orders from that customer have started to flow again. Furthermore, with new customers ramping up production in 4Q07, management expects a better sequential performance despite the weakening US dollar. As such, we have raised our full-year earnings forecast slightly to almost S$306m.

♦ Reiterate BUY recommendation

Following the most recent decline, Venture?s stock now trades at less than 12x FY07 and 10x FY08 EPS. We continue to recommend the stock as a BUY with a target price of S$18.70.

 

OCBC - Decent 3Q07 results

3Q07 results largely within expectations. Venture Corp (VMS) reported a pretty strong set of 3Q07 results, with revenue up 17.1% YoY to S$935.9m, while net profit jumped 29.4% to S$76.3m, in line with our forecast of S$76.7m earnings on S$963.8m revenue. This was in part aided by a tax write-back of S$8.5m and an investment gain of S$2.8m. However, VMS was also hit by S$1.5m forex loss (versus S$0.4m loss) and S$6.9m fair value loss on its S$209.0m investment in CDOs (Collaterised Debt Obligations) versus S$4.4m gain.

On a QoQ basis, revenue was down 6.8% and this was mainly due to the steep decline in SGD/USD rate as well as a one-time rationalisation of channel inventory by a major customer. As a result, this also led to a 20.3% QoQ fall in Printing & Imaging revenue to S$237.0m. Meanwhile, 3Q07 earnings slipped 3.0% QoQ, but 2Q was boosted by S$7.0m forex gain. Excluding these one-off items (CDO adjustment, forex and tax credits), earnings would have improved 9.1% QoQ.

CDO and forex worries likely overdone. On the recent CDO concerns, we think the issue is likely overdone. For one, VMS is not exposed to the sub-prime sector. Its investments are in a highly diversified global portfolio of good corporate bonds and loans, with 75% denominated in SGD and 25% in USD CDOs. Secondly, the CDOs will mature within the next 2 years, and as long as there are no defaults, there will be no impairment charges. Moving on to forex, VMS revealed that its exposure to USD is minimal as it sits on a nice natural hedge; 80% of its raw materials are bought using USD; some activities in Malaysia are sold in MYR, and this typically translates into a much larger forex gain. Last but not least, VMS revealed that it is not involved in any derivative hedging.

4Q07 outlook still buoyant. Going forward, VMS expects to show QoQ improvement in performance, as it continues to move towards value creation and use knowledge to differentiate itself from its peers. And as VMS has managed to renew its Pioneer Status in both Singapore and Malaysia, we have bumped up our earnings forecast for FY07 by 5.5% and FY08 by 1.5% to reflect the lower taxes. This in turns boosts our fair value estimate from S$19 to S$19.10, still based on 17x blended FY07/08F EPS. We retain our BUY rating.

 

SINGAPORE, Nov 5 (Reuters) - Shares of Venture Corp (VENM.SI: Quote, Profile , Research) rose as much as 3.8 percent to S$13.70 with 305,000 shares traded after the firm reported a 29 percent rise in quarterly earnings.

Venture Corp, Singapore's second-largest contract electronics firm, earned S$76.3 million ($53 million) in the three months ended September, compared with S$59 million in the same period a year ago. Revenue was up 17 percent at S$936 million. [ID:nSP72218]

Credit Suisse has raised its recommendation for Venture to "outperform" from "neutral" and maintained its target price of S$17.30, citing attractive valuations for the stock.

"Following the 20 percent drop in share price...Even though we do not expect strong growth next year, such valuations are not demanding given the 4 percent yield, and a company of its calibre," said Credit Suisse analyst Keng Hock Lim.

 

my guess is venture heading towards $12.10 level.

 

TA charts look bearish. Acc/Dist and Chaikin heading southwards.