Grand Venture Technology - DBS Research 2022-08-12: Look Beyond Near-Term Margin Pressure

• Grand Venture Technology (SGX:JLB)'s 1H22 revenue increased to $67.1m (+6.9% h-o-h, +25.3% y-o-y), in line with expectations. Although 1H22 revenue makes up 46.1% of our full year forecasts, we note that this is due to seasonality where first half is usually weaker.
  • - Read this at SGinvestors.io -
  • Life sciences: Growth in the life sciences segment was brought about by higher wallet share from new customers and higher production volumes for mass spectrometers and its related products. Customer supply chain constraints continue to dampen the growth of the life sciences segment.
  • - Read this at SGinvestors.io -
• 1H22 gross profit margins dipped to 26.9% from 33.1% in 1H21, below expectations. Consequently, net profit fell to $7.1m (-16.2% y-o-y, - 21.2% h-o-h). Grand Venture Tech's 1H22 net profit amounted to 36.4% of our full year forecasts, below our expectations. The net profit decline is in line with the slump in gross profit margins. Notably, Grand Venture Tech incurred S$0.9m of non-recurring expenses mainly related to mergers and acquisitions.
• Grand Venture Tech managed to increase EBITDA by 4.5% y-o-y despite near term headwinds. EBITDA rose to S$16.1m in 1H22, which represents a 4.5% y-o-y increase from S$15.4m in 1H21. 1H22 EBITDA was also slightly higher than the S$16.0m recorded in 2H21 despite the deteriorating macroenvironment.

Our Thoughts on Grand Venture Tech's 1H22

Further advancements into the semiconductor front end to mitigate back-end semiconductor customer weakness.

• Read more at SGinvestors.io.

Lee Keng LING DBS Group Research | Singapore Research Team DBS Research | https://www.dbs.com/insightsdirect/ 2022-08-12 SGinvestors.io

---