Venture Corporation

UOBKayhian on 27 Feb 2014

FY14F PE (x):
FY15F PE (x):

Venture reported net profit of S$38m for 4Q13, above our forecast of S$35.7m. Venture
registered a sequential expansion in revenue of 5.8% qoq, benefitting from pick-up in
Test & Measurement/Medical, Retail Store Solutions/Industrial and Computer
Peripherals & Data Storage. The broad-based recovery is an early sign of recovery.
The Printing & Imaging segmented contracted due to poor end-demand for printers.
Venture saw its net margin climb back to 6.1%, within target range of 6-8%. New
customers and new products provide better margins. The better net margin was
achieved despite higher effective tax rate of 9.5%. Venture has declared final dividend
of 50 S cents/share.

Slight strain from working capital. Venture experienced strain from working capital.
Receivables have been stretched from 66 to 82 days. This is an industry-wide
phenomenon as customers are asking for more flexible payment terms. Venture will
work on securing better payment terms from suppliers to improve working capital
management.

Maintain BUY. Our target price for Venture is S$8.85, based on 2014F PE of 16.5x
(Benchmark Electronics: 16.1x, Plexus Corporation: 15.6x), justified by its average
forward PE of 16.5x over the past 10 years.