Venture Corp’s Latest Earnings: Here’s What Investors Need to Know

November 8, 2022

Global healthcare stocks

Singapore investors have been monitoring results from companies as rising interest rates and inflation start to bite.

While many Singapore REITs and banks have already reported numbers, one of the less-followed areas in the Singapore stock market is the technology sector.

One of the key companies in the sector is Venture Corporation Ltd (SGX: V03), which is also a constituent stock of the Straits Times Index.

The technology services, products, and solutions provider services companies across sectors, from life sciences to advanced industrial and financial technology.

At the end of last week, the company gave a short update for its Q3 2022 and 9M 2022 periods. Here’s what investors should know about its latest numbers.

Revenue crosses S$1 billion mark

During Q3 2022, Venture recorded S$1.02 billion in revenue, which was up 32.8% year-on-year.

Meanwhile, its net profit for the period was S$97.4 million, an increase of 26.4% year-on-year.

Management stated that it saw broad-based growth across its portfolio, with its customer count now over 100. That has driven a solid rebound.

In fact, both the company’s 9M 2022 revenue and net profit of S$2.81 billion and S$272 million, respectively, have now surpassed the pre-pandemic levels that it achieved in 2019 (see below).

Venture Q3 2022 earnings

Source: Venture Corporation Q3 2022 and 9M 2022 presentation slides

The fact that Venture also recorded revenue of over S$1 billion for the quarter was a positive surprise, a quarterly feat it hasn’t achieved since 2017.

Venture maintains solid cash position

Venture also meets the requirements of a company that investors will want to hold in tough times in that it has a net cash position.

As of 30 September 2022, Venture has a cash balance of S$701 million with zero debt on its balance sheet.

While that was down from the end of 2021, it was mainly due to Venture raising its inventory levels throughout this year in order to meet demand from customers.

Benefitting from ex-China manufacturing

One of the supporting factors for Venture’s business this year has been the opening-up of Southeast Asia.

That has allowed it to continue delivering for clients given nearly all of Venture’s manufacturing capabilities are located in Malaysia.

That’s in stark contrast to companies relying on manufacturing in China, which has been hobbled by intermittent Covid-Zero lockdowns imposed by the Chinese government.

In fact, while management comments for the quarter highlighted strong growth in revenue and profits across its domains, it added that:

“Venture’s Malaysian entities delivered the most impressive contributions to the Group’s overall performance”.

It did note that the segments it operates in could continue to see volatility if geopolitical tensions, Covid-19 lockdowns and other headwinds remain.

Looking for long-term growth

Overall, though, it was another robust quarter for Venture as it continues to see a recovery from the pandemic-induced slump.

Given the long-term tailwinds of the segments it operates in, Venture’s business should experience sustainable growth over the next few years if it can stay competitive.

Venture also pays a relatively attractive dividend. Based on its current price, and an annual dividend per share (DPS) of 75 Singapore cents, Venture shares are giving investors a dividend yield of 4.4%.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Venture Corporation Ltd.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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