RHB Group Research analyst Jarick Seet has kept “buy” on Venture Corporation after the group announced that it will close its operations in Shanghai for a short period.
The temporary closure came after the Shanghai government announced that the city will undergo a two-phase lockdown for nine days.
To Seet, the impact on Venture Corp’s operations will be “minimal”, as he maintains his target price at $22.80.
Beyond the temporary shutdown of its operations in Shanghai, Seet estimates that Venture Corp will see a stronger performance in the FY2022 compared to that of FY2021.
According to the analyst, the group is anticipating robust demand based on its customer orders and forecasts across various technology domains.
“In the life science domain, demand for products in the area of analytical instruments remains strong. Positive market momentum is also visible across instrumentation, test and measurement, networking and communications as well as advanced industrials domains where several new product introductions (NPIs) are also expected,” he writes in his report dated March 31.
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“Customers in the lifestyle and wellness sectors have provided positive demand guidance,” he adds.
In addition, the group has a leftover backlog of orders from the 4QFY2021 to be completed for the FY2022.
“With solid demand across a majority of its domains, we expect margins to continue remain healthy,” says Seet.
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However, components such as field programmable gate arrays (FPGA) are still facing a shortage, which has led to Venture Corp’s management noting that it is “not completely out of the woods yet”.
While Seet sees the shortages of key components as hampering the group’s ability to complete these orders, he believes that the group will enjoy a “strong rebound as component shortages gradually ease through the course of 2022”.
Shares in Venture Corp closed 24 cents lower or 1.35% down at $17.57 on March 31.
