UOB Kay Hian analyst John Cheong is keeping his “buy” call on Venture Corporation with an unchanged target price of $22.80 as the group remains positive on its long-term growth.
The group’s strong balance sheet and good dividends also provide limited downside to its share price, the analyst writes.
Furthermore, the group’s key customers, including NCR, Agilent and Philip Morris are expecting revenues to grow in the FY2022.
As at end-2021, Venture Corp reported net cash of $808 million, which accounted for around 15% of its current market cap. The group’s net cash position led the pack of its US-listed peers, which were mostly in net debt positions.
“More importantly, Venture Corp has consistently paid the same amount of dividends or better than that in the preceding years,” the analyst says.
According to Cheong in his report dated April 7, Venture currently has an attractive valuation of FY2022 ex-cash P/E of 13x compared to its clients’ average P/E of 29x. Its dividend yield of 4.6% is also attractive, in the analyst’s view.
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In its latest annual report, Venture has stressed its bullish outlook with exciting future plans, as well as a strengthened management team that shows its clear succession plans, notes Cheong.
Since its establishment in 1989, Venture Corp has already seen three decades of growth with more to go.
“We believe that Venture Corp is at the crossroads of yet another transformation,” says Cheong. “Over the years, [Venture Corp] has gained good traction in selected ecosystems of interests, becoming a leading technology partner of choice for over 100 global companies. It manages a portfolio of more than 5,000 products in the space of life sciences, medical equipment, lifestyle and wellness, test and measurement, networking etc.”
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“With the post-pandemic climate accelerating advancements in selected high-growth technology domains, Venture Corp is excited about the opportunities it can leverage to capture value,” he adds.
Following its various achievements in new product introductions in 2021, 2022 looks set to become another exciting year for the group. This includes the launch of a new platform of next-generation devices which are expected to come to market in the same year.
“Positive market momentum is also visible in other domains, where VMS has a strong foothold, namely instrumentation, test & measurement, networking & communications, advanced industrials, and semiconductor-related equipment,” says Cheong.
Venture Corp’s clear succession planning with an experienced management team is another positive. The group, in November 2021, announced several changes to its leadership team including the appointment of its new CEO, Lee Ghai Keen. Lee had been with the group for over 20 years and had led its research and development (R&D) efforts and global operations over the years.
Wong Chee Kheong, who was previously the senior vice president of Venture Corp’s healthcare and wellness business, global supply base management & IT, is now the group’s new COO.
As at 12.25pm, shares in Venture Corp are trading 15 cents lower or 0.87% down at $17.20.
