Venture Corp Q3 2023 Earnings Signal Turnaround: Is It Time to Buy?

November 7, 2023

Semiconductor stock buy

In the fast-paced world of global electronics, Venture Corporation Limited (SGX: V03) stands out, having matched expert expectations with their latest financial outcomes. Venture Corporation’s net profit for Q3 2023 hit S$63.3 million, in line with the S$64.0 million anticipated.

Meanwhile, the nine-month financials saw a significant dip of 18.8% year-on-year (yoy) in revenue, primarily due to a decrease in customer inventory levels, Venture Corporation managed to maintain its net profit margin, which only saw a marginal decline from 9.6% to 8.9%. This speaks volumes about their adept cost management strategies amidst shrinking revenues.

The semiconductor player appears to be turning a corner as we move into Q4. There is an air of optimism that net profits could see a 5.4% sequential uptick to S$66.7 million, spurred by a revival in customer orders as depleted inventories signal a need for replenishment. Despite facing a high comparison base from the previous year, which may result in a yoy net profit, projections suggest that the company is on track for a return to profit growth in FY2024.

The company’s forward momentum is further evidenced by its commitment to rolling out new product introductions with both new and existing customers in the upcoming fiscal year. These launches, coupled with an increased demand for Venture’s module solutions from life science and industrial clients, herald a bright future for the company.

In terms of the balance sheet, Venture Corporation has a solid net cash balance of S$956 million at the end of September 2023. With modest capital expenditure expected in the near term, this will allow the company to sustain its dividend payout of around S$0.75 over the next two years. At this level, this translates into an attractive dividend yield of around 6.3%.

Looking ahead, the excitement builds as we anticipate re-rating catalysts on the horizon, including new product launches, improvements in component availability, and expanding revenue opportunities as more businesses diversify their production orders away from China towards Malaysia.

However, it is prudent to acknowledge the prevailing risks that come with the territory—supply chain disruptions, labour shortages, and a turbulent global economy could all play a role in shaping Venture Corporation’s journey. For investors and industry observers alike, Venture Corporation is one to watch as it navigates through the tides of change with unwavering determination. Keep a close eye on this company and consider the advantages of aligning with a company that is set for a recovery.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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