Date of Report: 3 October 2024
Broker: UOB Kay Hian
Strong Revenue Expectations
Venture Corp (VMS) maintains its expectation for stronger revenue in the second half of 2024 compared to the first half. In the first half of 2024, VMS successfully delivered sequential revenue growth from the first quarter to the second quarter.
Proactive Growth Initiatives
The company is proactively pursuing multiple initiatives to enhance its performance in the second half of 2024. These initiatives include:
- Onboarding new customers to broaden its client base.
- Engaging in new product introduction (NPI) activities to stimulate demand.
- Supporting customers in mitigating geopolitical risks.
Robust Financial Position
As of the second quarter of 2024, Venture Corp reported a strong financial position, with net cash amounting to S$1,191 million. This cash reserve accounts for approximately 30% of the company’s current market capitalization. VMS has consistently maintained or increased dividends compared to previous years, indicating strong cash flow and profitability.
Investment Recommendation and Target Price
UOB Kay Hian maintains a “BUY” recommendation for Venture Corp, with a target price of S$16.17. This target is based on a price-to-earnings (PE) ratio of 0.5 standard deviations above its long-term mean PE of 17x for 2025.
Key Catalysts for Growth
Key events that could enhance Venture Corp’s share price include:
- Positive earnings surprises due to higher-than-expected customer demand.
- Winning new customers and expanding market presence.
- Increased dividends and share buybacks reflecting the company’s robust cash position.
