Brokers’ take: Maybank raises Venture target price on ‘attractive’ yield prospects

MAYBANK Securities raised its target price for Venture Corporation to S$20.20 from S$19.55, after the electronics manufacturing services provider “handily beat” the research house’s projections for Q3 FY2022.

The brokerage lifted its earnings forecast for FY2022 and FY2023 by 3 per cent after Venture reported growth across all domains, with its revenue and net profit after tax for the first nine months of the year surpassing Maybank’s expectations. 

The raised near-term earnings estimates have led to a 3 per cent higher target price of S$20.20, pegged to 16 times the price-to-earnings ratio of FY2022 estimates.

In a report on Saturday (Nov 5), analyst Jarick Seet said he expects the final dividend for the year to be at S$0.50 per share, inclusive of the interim dividend of S$0.25 that had been declared earlier. In his view, this represents an “attractive 4.7 per cent yield for FY2022”.

Moreover, Seet believes Venture’s planned corporate share buyback reflects a “more efficient” utilisation of its net cash position, while the strengthening of the US dollar is advantageous for the group as the majority of its revenue is in USD. Venture is also shifting towards higher-margin products and solutions, he noted. 

In the future, Seet is confident that downside risks will be mitigated by attractive expected yields and continued strong demand from the specific value chain in which Venture operates. 

“Venture remains our top pick in the Singapore tech sector,” said the analyst, adding that he is confident that Venture will be able to navigate any volatility arising from geopolitical tensions and Covid-19 lockdowns “seamlessly”.

Like Maybank, which maintains “buy” on the stock, CGS-CIMB also reiterated its “add” call although its target price remains unchanged at S$19.62.

Said CGS-CIMB analysts in a report issued Friday: “Although (Venture’s) Q3 FY2022 net profit is above our expectations, we prefer to err on the side of caution and maintain our FY2022 net profit forecast given macro headwinds.”

SEE ALSO

Venture posts 25% rise in 9M net profit to S$271 million

Maybank downgrades outlook on Singapore tech sector to ‘neutral’; Venture still top pick

Shares of Venture were trading 3.6 per cent or S$0.58 up at S$16.71 as at the midday trading break on Monday.