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Is Venture Corporation A Bargain Now?

David Kuo

Venture Corporation Ltd (SGX: V03), which was founded in 1984 as a global electronics provider, is now a global provider of technology solutions, products, and services.

Its technology ecosystems span four segments, namely, Advanced Industrials, Consumer/Lifestyle, Financial Technology, and Life Science & Instrumentation. Venture is listed on the Singapore market and sports a market capitalisation of $S4.3 billion.

Between 1 Jan to 31 Dec 2018, Venture’s total share price returns, which includes reinvested dividends, registered a negarive return of 29.1%, underperforming the Straits Times Index (SGX: ^STI) which returned a negative 6.5%.

Has the sharp fall in Venture’s shares made it a bargain at current prices?

To find out we will use four metrics, namely, the price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, the dividend yield and net-debt-to-equity ratio.

The technology conglomerate has a trailing twelve months (TTM) earnings per share of S$1.27. Venture’s current share price stands at S$14.88, which implies in a P/E ratio of 11.7.

This is within its four years (2014-2017) historical PE range of 11.5 to 30.6. This also means that Venture’s current P/E is at the bottom end of its historical range, making it attractively valued.

At the end of the third quarter of 2018, Venture reported a Net Asset Value of S$7.8. At the current share price, this equates to a P/B ratio of 1.9. Looking at Venture’s NAV over the past four years, we see a rising trend with NAV increasing from S$6.47 in FY2014 to S$7.52 in FY2017.

At the end of September 2018, Venture’s had a net cash position of S$698 million and shareholders’ equity of S$2.25 billion. This indicates that Venture is in a very strong position financially, as it has more cash than debt. It could be in a favorable position should the economy encounter tough times.

Lastly, Venture’s dividend has increased over the last four years, moving up from S$0.50 in FY2014 to S$0.60 in FY2017. Assuming the company pays out a dividend at the same rate as FY2017 this would lead to a yield of 4.0% at current prices.

Looking at the four metrics, Venture seems to be attractively priced. Its P/E is at the bottom of its historical range, NAV is consistently rising, no debt and its dividend payout has been increasing.

This company is worth a closer look.

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The Motley Fool Singapore writer Esjay contributed towards this article. Esjay does not own shares in Venture Corporation.    

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn't own shares in any companies mentioned.