According to Yeo, Venture does not disclose its sales to the US, but he estimates the exposure is "significant" at anywhere between 20% and 40%.
"The additional US tariff imposed now includes a minimum of 10% universal tariffs on production exported from markets that include Venture's plants in Singapore and Malaysia," he adds.
Yeo notes that the US trade war is mainly targeted at China but the rest of the world is impacted by the universal reciprocal tariffs too.
"These should largely be less positive to Venture, as customers deliberate on the location of production, quantity, and pricing going forward," says Yeo.
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Yeo believes that with the tariffs in place, customers in the US will first avoid purchasing imported products, since pricing will generally be less favourable due to the tariffs.
Also, end-demand should likewise reduce as well, prompting reduced orders by Venture’s customers.
"Besides, higher import tariffs into the US would increase customers’ product costs and reduce their profitability. This should prompt such customers to reprice their orders in their negotiations with Venture," says Yeo, warning of slower demand and lower margins for the company.
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As such, Yeo has lowered his earnings estimates for FY2025 and FY2026 by 9.5% each, along with a lowered valuation multiple of 15x from 16x previously, reaching his new target price of $12.50.
Nonetheless, Yeo points out that Venture's balance sheet remains strong, valuation remains attractive at -2sd of its mean. And it gives a yield of 7%.
Venture Corp shares changed hands at $10.77, down 0.65% as at 9.33 am.
