Venture Corp (VMS) reported its 4Q11 results, which came in mostly in line with our estimates. Revenue fell 10.3% YoY but rebounded 8.4% to S$632.5m, or around 5% below our forecast; net profit fell 29.8% YoY but also grew 7.3% QoQ to S$38.0m, or 0.4% above our estimate. And as expected, VMS has declared a final cash dividend of S$0.55/share, unchanged from last year. Going forward, we note that the outlook is not as negative, with VMS expecting to see a better picking from 2H12 onwards. And given that the market is now adopting a more “risk-on” approach, we also raise our valuation peg from 10x to 12.5x, which in turn raises our fair value to S$7.83 (S$6.18 previously). Maintain HOLD given the limited upside.
4Q11 results mostly in line
Venture Corp (VMS) reported its 4Q11 results, which came in mostly in line with our estimates. Revenue fell 10.3% YoY but rebounded 8.4% to S$632.5m, or around 5% below our forecast; net profit fell 29.8% YoY but also grew 7.3% QoQ to S$38.0m, or 0.4% above our estimate. FY11 revenue slipped 9.1% to S$2,432.4m, or just 1.4% below our forecast, while net profit fell 16.8% to S$156.5m, it was 0.7% above our estimate. And as expected, VMS has declared a final cash dividend of S$0.55/share, unchanged from last year; this after ending the year in a net cash position to the tune of S$309.1m.
Outlook not as negative
Going forward, we note that the outlook is not as negative, with VMS expecting to see a better picking from 2H12 onwards; this as it anticipates improved traction with several key customers this year. VMS further adds that it expects to capture full-year revenue from products launched towards the end of 2011; in fact, a number of new products in all business segments are at the threshold of market release. Nevertheless, 1Q12 is traditionally a slow quarter; and management further notes that it is cognizant of the uncertainty in the global economy and the relative weakness in some customers’ business.
Worst like over
The group achieved a net margin of 6.4% in FY11, and with the worst likely over, we expect net margin to improve further to 6.8% this year. However, it is still possible that we may not see much top-line growth, given that VMS may continue to focus on low-volume high-mix business. As such, we are easing our FY12 revenue forecast down by 1% and earnings up by 1%. And given that the market is now adopting a more “risk-on” approach, we also raise our valuation peg from 10x to 12.5x, which in turn raises our fair value to S$7.83 (S$6.18 previously). Maintain HOLD given the limited upside.
Venture Corp (VMS) reported its 4Q11 results, which came in mostly in line with our estimates. Revenue fell 10.3% YoY but rebounded 8.4% to S$632.5m, or around 5% below our forecast; net profit fell 29.8% YoY but also grew 7.3% QoQ to S$38.0m, or 0.4% above our estimate. FY11 revenue slipped 9.1% to S$2,432.4m, or just 1.4% below our forecast, while net profit fell 16.8% to S$156.5m, it was 0.7% above our estimate. And as expected, VMS has declared a final cash dividend of S$0.55/share, unchanged from last year; this after ending the year in a net cash position to the tune of S$309.1m.
Outlook not as negative
Going forward, we note that the outlook is not as negative, with VMS expecting to see a better picking from 2H12 onwards; this as it anticipates improved traction with several key customers this year. VMS further adds that it expects to capture full-year revenue from products launched towards the end of 2011; in fact, a number of new products in all business segments are at the threshold of market release. Nevertheless, 1Q12 is traditionally a slow quarter; and management further notes that it is cognizant of the uncertainty in the global economy and the relative weakness in some customers’ business.
Worst like over
The group achieved a net margin of 6.4% in FY11, and with the worst likely over, we expect net margin to improve further to 6.8% this year. However, it is still possible that we may not see much top-line growth, given that VMS may continue to focus on low-volume high-mix business. As such, we are easing our FY12 revenue forecast down by 1% and earnings up by 1%. And given that the market is now adopting a more “risk-on” approach, we also raise our valuation peg from 10x to 12.5x, which in turn raises our fair value to S$7.83 (S$6.18 previously). Maintain HOLD given the limited upside.
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