20140122-Maybank_KERPL-NDR_feedback__All_about_3D_printing_11页_329kb

Venture Corporation (VMS SP) Summary

Core Information

• Share Price: SGD7.62
• Target Price: SGD8.70 (+14%)
• Market Capitalization (USD): SGD1.6B
• Annual Dividend Value (USD): 1M
• Country: Singapore
• Industry: Technology
• Rating: BUY (Unchanged)
• 52-Week High/Low (SGD): 8.75 / 7.08
• Free Float (%): 90.3
• Issued Shares (m): 275
• Market Cap (SGD): SGD2.1B
• Major Shareholders:
  • Aberdeen Asset Management (Asia) Ltd. - 26%
  • Sprucegrove Investment Management Ltd - 8%
  • WONG NGIT LIONG - 7%

Key Highlights

3D Printing Segment

• The 3D printing segment is a new area of focus for Venture.
• NDR (Non-Disclosure Review) feedback indicates strong interest from clients in the segment.
• The segment is still in early stages, but there are encouraging market developments.
• Venture is likely collaborating with its customers in the 3D printing space.
• New products from 3D printing companies like MakerBot are expected to broaden the market and reduce price points.
• The company is likely to contribute low-single-digit revenue in FY14 and high-single to low-double-digit in FY15.

Revenue and Financials

• Revenue Growth: Expected to be low in FY14, but may pick up in FY15 due to 3D printing and life sciences growth.
• EBITDA and Net Profit: Projected to grow by 11% in FY14 and 4.1% in FY15.
• Core EPS: Expected to increase from 49.0 cts in FY13 to 54.4 cts in FY14 and 56.6 cts in FY15.
• Net Dividend Yield: Expected to remain at 6.6%.
• ROAE and ROAA: Projected to increase to 8.6% and 6.4% in FY15 respectively.
• EV/EBITDA: Expected to decrease from 8.9 in FY14 to 8.4 in FY15.
• Free Cash Flow: Expected to rise from SGD217.2M in FY13 to SGD265.6M in FY14 and SGD258.7M in FY15.

Business Resilience

• Venture has diversified its business, reducing reliance on volatile consumer segments.
• No single customer accounts for more than 15% of total revenue in any one period.
• The company has built a resilient business model to mitigate risks from customer-related M&A.

Life Sciences Segment

• Life sciences is a potential growth driver, currently part of the test & measurement segment.
• The segment is expected to grow due to trends in personalized and predictive medicine.
• Venture is working with life sciences customers, although identities are not disclosed.
• Recent developments include new gene sequencer products from Illumina, which could drive demand.

M&A Impact

• Venture has been affected by M&A activities among its customers, particularly from 2010-2012.
• The impact of these M&A activities is expected to taper off, with residual effects only in FY14.
• The company is optimistic about future growth, assuming no new economic downturns or M&A activities.

Key Financial Metrics

Strategic Overview

• Venture has exited the consumer electronics business, focusing on industrial and enterprise electronics.
• The company has diversified its revenue streams, with the retail store solutions & industrial products segment now accounting for 30% of revenue.
• The printing & imaging segment accounts for 12-13% of revenue, down from 17% in 2012.
• The company has been working to reduce customer concentration and build a more resilient business model.

Research Offices

• Singapore: NG Wee Siang, Gregory Yap
• Malaysia: Wong Chew Hann, Desmond CH'NG, LIAW Thong Jung, ONG Chee Ting, Mohshin AZIZ, YIN Shao Yang, Tee Sze Chiah, Wilson LIEW, ONG Kian Lin, James KOH, YEAK Chee Keong, Derrick HENG, Wei Bin, JohnCHEONG
• Hong Kong / China: Howard WONG, Alexander LATZER, Alison FOK, Jacqueline KO, Karen KWAN, Osbert TANG, Philip TSE, Ricky WK NG, Simon QIAN, Steven ST CHAN, Warren LA, William YANG
• India: Jigar SHAH, Anuphay GUPTA, Urmil SHAH
• Indonesia: Wilianto IE, Rahmi MARINA, Aurellia SETIABUDI, Anthony YUNUS, Isnaputra ISKANDAR, Pandu ANUGRAH, Janni ASMAN, Lucky ARIESANDI
• Philippines: Luz LORENZO, Laura Dy-LIACCO, Lovell SARREAL, Rommel RODRIGO, Katherine TAN, Ramon ADVIENTO
• Thailand: Sukit UDOMSIRIKUL, Mayuree CHOWVIKRAN, Padon VANNARAT, Surachai PRAMUALCHAROENKIT, Suttatip PEERASUB, Sutthichai KUMWORACHAI, Termporn TANTIVIVAT, Woraphon WIROONSRI, Jaroonpan WATTANAWONG, Chatchai JINDARAT, Maria LAPIZ, Jesada TECHAHASDIN, Kittisorn PRUITIPAT, Sittichai DUANGRATTANACHAYA
• Vietnam: Le Hong Lien, Thai Quang Trung, Truong Thanh Hang, Le Nguyen Nhat Chuyen, Nguyen Thi Ngan Tuyen, Sony Tra Mi, Trinh Thi Ngoc Diep, Dang Thi Kim Thoa, Nguyen Trung Hoa

Conclusion

Venture Corporation is positioned for growth through its 3D printing and life sciences segments, supported by a resilient business model and diversified revenue streams. The company is expected to see improved financial performance in FY15, with a target price of SGD8.70 and a BUY rating. The company has been affected by M&A activities in the past but is now in a better position to capitalize on emerging opportunities in the 3D printing and life sciences industries.