"The escalation in the trade war between the US and its trading partners is, in our view, likely to have a negative impact on Venture’s FY2035 earnings.
"In its FY24 results commentary, Venture was already warning that its short-term business outlook was uncertain," adds Tng.
He believes that Venture’s FY2025 to FY2027 revenue could be weighed down and has thus lowered his earnings estimate for the same period by 17.1% to 18.3%.
Drawing reference to the 2007 - 2009 Global Financial Crisis, Tng notes that Venture's valuation dipped to 12.1x earnings.
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His revised target price of $10.13 is derived from applying the same multiple, down from his previous earnings multiple of 14.9x.
Tng believes that Venture's share price will be supported at the $10 level, given its net cash hoard of $1.32 billion and yield of 6.89%.
For Tng, upside risks include new product launches by customers, and better-than-expected revenue opportunities as business opportunities emerge from companies diversifying their production from China to Malaysia.
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On the other hand, downside risks include potential supply chain disruptions affecting the availability of parts and components it needs and a worsening global economic outlook, potentially reducing orders from its customers even further.
Venture Corp shares changed hands at $10.40 as at 11.07 am, down 4.67%.
