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Brokers' take: UOB Kay Hian bullish on Venture, sees profit surpassing 2018 consensus estimate

UOB Kay Hian has upgraded mainboard-listed Venture Corporation to a "buy", and is upbeat that the global electronics provider has potential revenue in excess of S$2.5 billion per year.

"Should Venture reach 100 per cent production capacity in 2018, net profit will easily surpass consensus estimate of S$385 million in 2018," a report on Thursday said.

UOB Kay Hian added that their findings without input from management reveal "strong evidence" that Venture is the manufacturer of a consumer device for an American multinational company.

It added that Venture is likely to benefit from the strong demand for the device coming from Japan and South Korea, coupled with a likely production ramp-up for a "highly anticipated" US launch in H1 2018 post FDA (Food and Drug Administration) approval.

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The brokerage has upgraded the stock by 27.4 per cent to S$31.88.

As at 9.50am, Venture was trading 85 Singapore cents higher at S$25.88.

"A launch of the device in the US will push production to full capacity, with earnings likely exceeding consensus estimate in 2018," UOB Kay Hian said.

UOB Kay Hian head of research Andrew Chow previously told BT that he was "really rooting for Venture which is likely to report a strong fourth quarter".

"They received a massive re-rating after their third-quarter results, but they only pay dividends once a year so everyone will be watching," he said.

Venture will report its fourth-quarter and full-year results on Feb 28.