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Broker's take: CIMB Research issues 'buy' call on Venture Corporation

CIMB Research on Monday issued a "buy" call on global electronics services provider Venture Corporation with a target price of S$8.96, up from the previous target of S$8.91.

It said that the company's FY2014 core net profit was in line with expectations, at 96 per cent of its estimates and 99 per cent of consensus forecasts.

Pretax margins have remained strong at 6.6 per cent versus 6.7 per cent in Q4 FY2013 and 6.8 per cent in Q3 FY2014.

While some customers are highlighting concerns over the pace of economic development in Europe and Asia, the research house said that it believes that Venture has enough experience and customer diversification to sail through this.

"We tweak our FY2015-2016 forecasts and introduce FY2017 estimates. Final dividend per share of S$0.50 was in line. We maintain 'add' with a slightly higher target price of S$8.96 (still based on 14 times calendar year 2015 price earnings, five-year average). Base dividend per share should remain at S$0.50, which translates to a dividend yield of 6.2 per cent."

CIMB Research added that potential catalysts are stronger customer orders.

Venture's counter rose three Singapore cents to S$8.15 at 11.20am.