Monday, November 9, 2015


Venture's 3Q15 results came in within expectation as net profit rose 12.2% y/y to $40.5m on the back of a 15.7% gain in revenue to $692.9m, its best quarterly growth since 2009..

The healthy top line performance was driven by existing and new customers, as well as favourable FX movements. Most of its segments did well, including test & measurement/life sciences (+29%), computer peripherals & data storage (+45%), retail store solutions & industrial products (+9%), and network & communications (+8%). The only exception was printing & imaging (-11%).

Pretax margin inched 0.1ppt to 6.9%, weighed by a swelling R&D expense of $11.8m (+35.6%). But bottom line was eroded by a higher effective tax rate of 15.6% (3Q14: 11.7%) due a change in product mix and the expiry of certain tax incentives.

Maybank-KE believes the strong growth momentum for its test & measurement/life science segment will be sustained in 4Q15.

Free cash flow jumped 146% to $68.4m in 3Q15, higher than the 80% improvement in 1H15. Consequently, the house touts that full year DPS may be raised to 55¢ by FY16 from 50¢ in the last three years and maintains its Buy rating with an unchanged TP of $10.70.

Venture is currently trading at 14.9x core FY15e P/E and offers a dividend yield of 5.9%. It remains in Market Insight Yield portfolio.

Latest broker ratings:
Maybank-KE maintains Buy with a TP of $10.70
CIMB maintains Add, raises TP to $10.11 from $9.37
OCBC maintains Buy, raises TP to $9.00 from $8.62
Credit Suisse maintains Neutral with a TP of $7.75

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