Venture Corporation: On the Road to Recovery

June 26, 2024

Venture Corporation Limited (SGX: V03) has released its Q1 2024 business update, signaling an optimistic outlook for the remainder of the year. The company expects stronger revenue growth in Q2 2024 and H2 2024, driven by onboarding new customers and expanding its production capabilities. With a robust dividend yield and a focus on key technology domains, Venture is positioning itself for a promising recovery.

Let’s dive into the details and explore the potential opportunities and risks for investors.

3 Key Takeaways

1. Revenue Growth on the Horizon

Venture Corporation is anticipating a quarter-over-quarter (qoq) improvement in revenue for Q2 2024 and a half-over-half (hoh) increase for H2 2024. This growth is supported by the addition of new customers in sectors like medtech, lifestyle, and promising technology domains.

2. Expansion and New Facility

The new Batu Kawan facility is set to enhance Venture’s production capacity by adding 10% to its total floor area. This expansion is expected to support the company’s revenue growth and improve its operational efficiency as production ramps up.

3. Strong Dividend Yield

Venture Corporation offers an attractive dividend yield of 5.40% over FY24-26F. This consistent dividend payout provides a cushion for investors, making it a compelling choice for income-seeking investors.

3 Key Risks

1. Customer Concentration

Venture’s revenue is increasingly dependent on a few major customers. In 2023, two customers accounted for more than 10% of its revenue, up from one in 2022. Losing any of these key clients could significantly impact the company’s financial performance.

2. Supply Chain Disruptions

The potential for supply chain disruptions remains a significant risk. Issues such as component shortages or logistical challenges could hinder Venture’s ability to meet customer demands and impact its production timelines.

3. Global Economic Uncertainty

A worsening global economic outlook could reduce orders from customers, affecting Venture’s revenue and profitability. Investors should be mindful of macroeconomic trends that could influence the company’s performance.

What Can Investors Do?

  • Diversify Portfolio: Given the customer concentration risk, it’s prudent for investors to diversify their holdings to mitigate potential impacts from any single customer’s revenue loss.
  • Monitor Supply Chain Developments: Keep an eye on global supply chain trends and disruptions. Investing in companies with strong supply chain management capabilities could provide some insulation against these risks.
  • Focus on Dividends: For income-focused investors, Venture’s strong dividend yield is an attractive feature. Consider reinvesting dividends to compound returns over time.

Take Action Now: Seize the Opportunity with Venture Corporation

Venture Corporation is poised for a revenue recovery with its strategic expansions and new customer acquisitions. While there are risks to consider, the company’s strong dividend yield and growth prospects make it a worthy candidate for your investment portfolio. Stay informed, diversify, and take advantage of the opportunities that Venture Corporation offers.

About Venture Corporation

Venture Corporation Limited, headquartered in Singapore, is a global provider of technology solutions, products, and services. The company operates in various sectors, including medtech, lifestyle, and precision engineering. Known for its innovation and operational excellence, Venture continues to expand its capabilities to meet the evolving demands of its customers. With a strong commitment to growth and sustainability, Venture Corporation remains a key player in the tech manufacturing services industry.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of the company 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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