“Note that in its 1QFY2025 business update, management said the broad consensus among its customers is that the ongoing tariff situation has created significant uncertainty in the global economic environment, with no clear visibility regarding the tariff landscape over the next 12 months,” Tng and Tan write in their July 28 report.
“Venture has been addressing this by creating competitive solutions for its customers and partners to mitigate any tariff impact through its US, Singapore and Malaysia factories,” they add.
Furthermore, Venture’s management team sees opportunities to expand its market share in the coming years in “at least three or four of [the] technology domains that the group participates in”.
According to Nasdaq-listed genetic testing firm Illumina’s 2QFY2025 earnings call, research funding constraints and inflationary pressures from tariffs are creating a challenging environment, particularly for academic and government customers, the analysts note.
Despite the “challenging” earnings outlook in 2HFY2025, the analysts see that the equity market development programme (EQDP), which has lifted tech stock valuations, could help lift Venture’s valuation as well.
“We believe Venture could see an upward re-rating to 14.5 times, its 20-year (FY2006 - FY2025) average P/E, which lifts our target price to $12.14,” say Tng and Tan, who have a previous target price of $10.97, which was based on an FY2026 P/E of 13.1 times or 0.5 standard deviations. That valuation was due to continued tariff concerns.
The analysts’ “hold” call is due to its dividend yield of 6.01% and $1.32 billion net cash balance sheet as at the end of December 2024.
To this end, Tng and Tan believe Venture’s shares could find “support” at their FY2025 book value per share forecast of $10.
Shares in Venture closed 15 cents lower or 1.2% down at $12.33 on July 28.
