Venture

Venture: -3% today to $7.62, a level last seen only in 2009. Kim Eng note that despite the US dodging a debt default at the last minute, disappointing US manufacturing data for Jul appears to be impacting negatively today.

House had already warned in early July that Co’s earnings this yr are expected to be lackluster and susceptible to disappointment, given the slump in US manufacturing and supply chain problems caused by the Jap quake in March. At the time, house had cut our FYDec2011 forecast by 10% to reflect this, as well as reduced TP to $10.40.

At the current level however, Venture's div yield is becoming more and more attractive at 7.2%. Recall that Venture pays a fixed dividend of 55c a year. No matter what happens to earnings, house believe the div is safe given its strong balance sheet and minimal capex. Even in 2009, when earnings slumped to $143m (forecasting $190m for this year), it still paid a 50c div. During the 2008 crisis low, Venture was yielding a 15% rate of return on the dividend alone.