Venture Corporation

Venture Corporation: UOBKH downgraded the counter to Hold and lowered its TP to $8.15 (from $8.50), due to weakness from key customers Agilent and Toshiba TEC in 2H14. The reorganisation and reshuffling of key executives at Agilent has resulted in a slowdown of orders from in 2H14. However, house notes that Venture is optimistic of growth from the LDA and EM businesses in 2015 after completion of the reorganisation by end-14. House also expects weakness from Toshiba TEC, a key customer for the retail store solutions segment, after it lost market share for point-of-sale systems post-acquisition of IBM’s retail store solutions business. In addition, the seasonal pick-up in 2H14 is expected to be gradual and modest. Actual orders received have fallen behind customers’ previous forecast as corporate spending on IT and capex remains weak. Performance in 3Q14 is expected to be flat, followed by gradual seasonal ramp-up in 4Q14. House reduced its net profit forecasts by 4.3% for 2014 and by 2.5% for 2015. The stock faces short-term headwinds but should be supported by an attractive dividend yield of 6.4%.