Hot stock: Venture shares fall on Monday after Q1 results release

SHARES of Venture Corporation fell on Monday (May 8) morning after the technology company last week reported a year-on-year decline in its profit for the first fiscal quarter.  

As at 9.27 am, the counter had shed S$1.04 or 6.1 per cent to S$16.02 from the previous week’s closing price of S$17.06. This was S$0.54 or 3.3 per cent below Friday’s adjusted close of S$16.56, factoring in a dividend of S$0.50 per share. The company began trading ex-dividend on Monday morning.

It later recovered to trade at S$16.10, down S$0.96 or 5.6 per cent, as at 10.37 am. 

No married deals were recorded in early trade, ShareInvestor data showed. 

The share price movement occurred after the company on Friday reported that Q1 net profit was down 12.4 per cent year on year to S$73.6 million.

Analysts lowered their target prices for Venture after its Q1 earnings underperformed estimates. 

Maybank Securities maintained a “hold” call for the counter but lowered its target price to S$16.50, from S$17.32. This came after the brokerage downgraded Venture to “hold” from “buy” last month. 

RHB kept its “buy” call and cut its target price to S$19.36. Similarly, CGS-CIMB reiterated “add” for Venture and reduced its target price to S$18.11. 

UOB Kay Hian (UOBKH) downgraded Venture to “hold” with a lowered target price of S$16.99, though it noted that the stock currently offers a “decent” dividend yield of about 4.4 per cent. 

DBS Group Research also downgraded the stock to “hold”, and lowered its target price to S$18.10.

Based on the outlook of Venture’s customers, near-term demand weakness is expected, said UOBKH. 

CGS-CIMB added that as customers delay product launches and become more cautious in their order placement, it could lead to a decline in forecast FY2023 revenue and net profit. The brokerage reduced its FY2023 to FY2025 revenue forecasts by 11.8 per cent. 

Despite challenging times ahead, Maybank noted that demand from Venture’s life sciences and healthcare customers remains strong. It believes new product introductions expected in the coming quarters may boost profitability. 

As at end-March, Venture has a net cash position of S$920 million and no debt. DBS said this would support at least a repeat of the S$0.75 distribution per share in FY2022 for the current financial year. 

RHB was positive on the stock, although Venture’s Q1 performance was disappointing. The brokerage anticipates global economic recovery and growth to begin by the summer of 2023. 

“This should strengthen customer demand and spur more aggressive programme rollouts over the longer term,” it added. 

Overall, DBS and Maybank were optimistic about the company’s long-term prospects. 

“We remain positive on Venture’s ability to monetise its unique offerings and differentiating capabilities,” noted DBS.