Venture Corp

Venture Corp: According to World Semiconductor Trade Statistics, the semiconductor industry has a stable outlook as all regions are expected to record positive growth rates in 2016 and 2017. Additionally, technology market watcher, Gartner, released that worldwide server revenue grew 17.9% YoY to US$13.4b on the back of a 13% growth in shipments to 2.7m units.

Venture’s next wave of growth is likely to come from its medical/life sciences (ML) segment, which makes up 32% of its total FY14 revenue. One of Venture’s key ML customers, Illumina, has worked together with Venture to launch a relatively low-cost desktop DNA sequencer in 2014. Venture is expected to benefit from the strong set of Illumina’s 1Q15 results. Furthermore, Gartner states healthcare providers’ spending on IT products and services are expected to grow 7% to US$1.2b in India and 0.8% to US$2.9b in Middle-East and North Africa.

OCBC thinks that Venture will benefit from these increased spending and through deeper collaboration with its customers. The house has kept their forecasts unchanged as this trend is within their expectation. However, the recent correction presents buying opportunity with an attractive FY15F dividend yield of 6.5%. Hence the house upgrades to BUY rating with same TP of $8.41.