He adds that the group’s balance sheet remains strong, at net cash of around 4.5 cents per share as of FY2024, while its dividend yield is attractive at about 7%.
“In addition, Venture is buying back its shares, which supports earnings per share (EPS). The stock is attractively priced at one s.d. lower of its mean historical P/E and trades below peer average despite our earnings cut due to 1Q2025’s revenue disappointment,” writes Yeo.
While the analyst believes the stock’s downside owing from the current tariff situation should also be priced in, his dividend per share (DPS) payout remains unchanged.
In the 1QFY2025, Venture’s revenue fell 7.5% y-o-y to $617 million, while net profit came in at $56 million, a 9.3% y-o-y decrease, failing to meet Yeo’s expectations.
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The revenue decline was led by the group’s lifestyle consumer technology domain, where there were lower volume sales for product replacements amid improved reliability for its newer generation products.
Otherwise, Yeo notes, group revenue would have grown y-o-y excluding this segment’s decline.
Net margin remained stable at 9.1%, broadly in line with expectations, as Venture focused on operating efficiencies and higher value solutions through its differentiated capabilities.
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Overall, Yeo has reduced his FY2025 to FY2027 earnings estimates by 2% each, lowering his revenue forecast marginally to account for the 1QFY2025’s drop in sales from the lifestyle consumer technology domain.
He adds: “Our margin assumptions remain largely unchanged, given that Venture continues to focus on higher-margin projects and achieving cost efficiencies. Our revenue cut includes an expected slowdown in orders as well, as customers temporarily stall production to mull over the tariffs.”
Downside risks to his forecasts include earnings downside on his new valuation formula.
He writes: “With valuation now pricing in existing universal reciprocal tariff rates, we deem any rate lowering for countries (including Malaysia) as [a] share price catalyst.”
Shares in Venture closed one cent higher or 8.7% up at $11.46 on June 13.
