Grand Venture Technology - Pinning Its Hopes On The Front-End
- Grand Venture Technology (GVT, SGX:JLB) recorded a S$32.9m revenue in 3Q22, which was a 3.2% y-o-y increase but a 4.9% decline q-o-q. We were expecting S$37.4m. 3Q22 net profit fell 33.4% y-o-y to S$3.5m (in line with our expectation), with net profit margin contracting to 10.5% (vs. 3Q21’s 16.2%).
- In 9M22, Grand Venture Technology incurred one-off expenses of S$1m relating to M&As (Formach and J-Dragon), as well as COVID-19-related costs.
- Grand Venture Technology maintains its strategy of penetrating the front-end semiconductor services industry to expand its value chain participation. As of 3Q22, the company guided that it has made good progress in engaging prospective front-end customers.
- Grand Venture Technology also expects healthy demand from the Lifesciences, Electronics, Aerospace, Medical and Others segments, driven by continued customer wallet share expansion, longer life cycles of life sciences and medical products, and sustained demand from the Medical and Aerospace segments.
- Our target price for Grand Venture Technology is based on 9.6x FY23F P/E, 0.5 standard deviation below its 4-year average (FY19-22).
- We reiterate our REDUCE call, pending Grand Venture Technology’s ability to onboard front-end customers.
- De-rating catalysts are operational disruptions from COVID-19 lockdowns in China and higher-than-expected spending for long-term growth.
- Upside risks are potential new customer wins and accretive M&As, which could raise Grand Venture Technology’s revenue over FY23-24F, resulting in higher net profit.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
William TNG CFA CGS-CIMB Research | Izabella TAN CGS-CIMB Research | https://www.cgs-cimb.com 2022-11-08 2022-11-08
Previous report by CGS-CIMB:
2022-10-14 Grand Venture Technology - Front-End Diversification To Take Longer
Grand Venture Analyst Report,
Grand Venture Target Price,
Grand Venture Share Price History,
Grand Venture Announcements,
Grand Venture Dividends/ Corp Actions,
Grand Venture News Articles