Venture

Venture: 2Q15 results came in line with expectations as net profit rose 7.5% y/y to $36.1m, taking 1H15 earnings to $68.6m (+6.7%) or 45% of full year consensus estimate.

Revenue grew 10% to $661m on higher shipment and favorable FX movement, an improvement over 1Q15 when top line growth was mainly driven by FX gains.

Topline growth was led by the test & measurement/life sciences (+11.7% to $219m), networking & communications (+13% to $114m), and computer peripherals & data storage (+29% to $72m) segments, but sales for retail store solutions & industrial products (+4% to $189m) and printing & imaging (+0% to $68m) segments were relatively flat.

Pretax margin inched up by 0.2ppt to 6.4%. Profitability could have been better were not for a 27% hike in R&D expenses to $8.7m, mainly for new prototyping expenses, and a 65.9% increase in taxes to $6.2m due to expiry of the group’s pioneer status.

Maybank-KE opines that DPS for FY15-17 could be restored to $0.55 (FY14: $0.50), premised on strong free cash flow improvement. If this materialises, dividend yield will be lifted to 6.8% from 6.2%.

Venture is currently trading at 14.2x FY15 consensus P/E and remains in Market Insight’s Yield portfolio.

Latest broker ratings:
Maybank-KE maintains Buy with TP of $10.70
UOB Kay Hian maintains Buy with TP of $9.00
OCBC maintains Buy, up TP to $8.62 from $8.41
CIMB maintains Add, cuts TP to $8.56 from $8.96
RHB maintains Neutral, cuts TP to $8.03 from $8.16