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Venture kept at ‘neutral’ by RHB with $16.30 target on worsening US-China trade war

PC Lee

SINGAPORE (June 26): RHB Research is maintaining Venture Corp at “neutral” given things are not going smoothly for tech global manufacturing with the worsening of the US-China trade war.

Despite Venture being more resilient than its peers, RHB says it should be difficult for the company to avoid headwinds ahead. As a result, the research house expects profitability to take a hit in 2Q19.

“We expect headwinds in 2H, that is, product delays, and deterioration of margins due to a lower revenue base,” says lead analyst Jarick Seet in a Wednesday report, “As such, we lower our FY19F PATMI by 8.4% to reflect these potential headwinds.”

Nevertheless, Venture says it will continue to focus on its long-term strategy while contributions from new customers won in past years are expected to grow y-o-y in 2019.

In FY18, Venture declared total DPS of $0.70, or a 55% payout of its NPAT.  Management says it is looking to pay out sustainable dividends, and RHB expects FY19F dividends to be likely the same, or higher than that of FY18, which should result in a yield of 4%.

As at 3.29pm, shares in Venture are down 48 cents to $15.98. RHB has lowered its target price from $19 to $16.30, implying 13 times FY19F earnings.