Venture Corporation

UOBKayhian on 10 Jul 2015

FY15F PE (x): 14.2
FY16F PE (x): 13.0

Anticipate gradual recovery. Management expects a gradual sequential pick-up in quarterly revenue after a lacklustre 1Q15. Customers have not made significant changes to their forecasts despite heightened uncertainties. We expect revenue to increase 4.5% qoq in 2Q15 and have modelled an 8.6% hoh increase in revenue in 2H15. Venture has built a diversified customer base, which continues to provide the company resilience and stability. Cautiously optimistic. Venture is aiming for mid- to high-single-digit growth in top- and bottom lines for 2015. Disruptions from M&As involving its customers have abated. The depreciation of the Malaysian ringgit and the Singapore dollar will help Venture maintain net margin within the target 6-8% band. Maintain BUY. Our target price is S$9.00, based on 16.5x 2015F PE (Benchmark Electronics: 12.8x, Plexus Corporation: 14.2x), justified by its average forward PE of 16.4x over the past 10 years.