Grand Venture Q1 net profit after tax falls 58.3% on weaker semiconductor activity

MANUFACTURING-service provider Grand Venture Technology : JLB 0% posted a 58.3 per cent fall in net profit after tax to S$1.5 million for the first quarter ended Mar 31, 2023, from S$3.6 million the year before.

Revenue for Q1 fell 17 per cent to S$26.9 million, from S$32.5 million a year earlier. The decline was mainly due to a contraction in activity in the company’s semiconductor segment, it said in a business update on Tuesday (May 9).

Even so, the decline was partially mitigated by higher revenues from the mainboard-listed company’s electronics, aerospace, medical and others segment, it added.

Revenue from the semiconductor segment fell 37.1 per cent to S$13.7 million in the first quarter, from the S$21.8 million recorded in the preceding year-ago period. This was amid a “seasonally quiet quarter alongside a general contraction in activity in the back-end semiconductor sector and persistent geopolitical headwinds”, said the company.

Nevertheless, the group is working to onboard new back-end semiconductor customers, and also plans to diversify its revenue to front-end semiconductor, life sciences, medical, aerospace and others.

In contrast, revenue from the electronics, aerospace, medical and others segment rose 48.9 per cent to S$8.5 million in Q1, from S$5.7 million a year ago.

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Meanwhile, the life sciences segment’s revenue declined slightly by 5.1 per cent to S$4.7 million, from S$4.9 million the previous year, as the group’s customers became “more cautious with inventory management amid softer market sentiments”.

While the semiconductor industry is expected to remain muted in the first half of 2023, Grand Venture believes industry momentum will pick up in the later half of the year as excess inventories are digested.

Even so, it is mindful that the recovery could be delayed, given prevailing market uncertainties. Thus, the company will continue to “make good progress in obtaining qualification for parts from its front-end semiconductor customers, while working closely with these customers to pursue a greater degree of involvement in higher-value projects and content”.

The group also plans to reinforce its long-term resilience through diversification, and is taking the time to expand, consolidate and enhance its capabilities.

Shares of Grand Venture closed S$0.005 or 1 per cent lower at S$0.49 on Tuesday, before the update was given.