Venture Corporation - RHB Invest 2024-02-26: Near-term Prospects Priced In; Downgrade To NEUTRAL

• We expect the Venture Corp's immediate quarterly earnings to remain soft, on continued customer destocking, and valuation will hold at the -1 standard deviation level, without further earnings decline. Sequential earnings should improve in 2H24 after customer destocking tapers. As such, we believe the stock has priced in its immediate term prospects.
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FY23 in line with expectations.

• Venture Corp (SGX:V03)'s FY23 earnings came in at S$270m (-22% y-o-y) on the back of S$3,025m (-27% y-o-y) revenue. Revenue decline was affected by lower customer demand and customers destocking their inventory due to muted end demand vs higher base in FY22, as customers ramped up their orders aggressively in the previous year. See Venture Corp's announcement dated 22 Feb 2024.
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• FY23 EBIT margin was 9.9%, lower than our 10.7% expectation. This is due to higher-than-expected opex despite gross margin outperforming. Earnings were also buffered by significantly higher investment revenue (S$28m vs S$9m in FY23) due to the high interest rate environment.

S$0.75 dividend for FY23

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Alfie Yeo RHB Securities Research | https://www.rhbgroup.com/ 2024-02-26 SGinvestors.io

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