Venture Corporation (VMS SP) 1Q25 Earnings Analysis: Hold Rating & Target Price – UOB Kay Hian Report

UOB Kay Hian

Thursday, 15 May 2025

Venture Corporation (VMS SP): Navigating Tariff Uncertainties and Lifestyle Consumer Technology Weakness

Venture Corporation: HOLD Recommendation Maintained

Venture Corporation (VMS SP) maintains a HOLD rating with a revised target price of S\$12.01, reflecting a 6.6% upside from the current share price of S\$11.27. The adjustment accounts for persistent uncertainties in the global economic environment due to ongoing tariff situations [[1]].

Company Overview

Venture Corporation is a global electronics services provider, offering technology solutions, products, and services across various high-mix, high-value, and complex products [[1]].

Key Stock Data

• GICS Sector: Information Technology [[1]]
• Bloomberg Ticker: VMS SP [[1]]
• Shares Issued (m): 287.7 [[1]]
• Market Cap (S\$m): 3,242.2 [[1]]
• Market Cap (US\$m): 2,498.0 [[1]]
• 3-mth Avg Daily Turnover (US\$m): 6.7 [[1]]
• 52-week High/Low: S\$15.64/S\$10.17 [[1]]
• Major Shareholder: Wong Ngit Liong (7.1%) [[1]]
• FY25 NAV/Share (S\$): 10.11 [[1]]
• FY25 Net Cash/Share (S\$): 4.71 [[1]]

Price Performance

• 1 Month: 5.4% [[1]]
• 3 Month: (13.0%) [[1]]
• 6 Month: (12.6%) [[1]]
• 1 Year: (19.4%) [[1]]
• Year-to-Date: (14.3%) [[1]]

1Q25 Earnings Analysis

VMS reported 1Q25 earnings of S\$56 million, a 7% year-over-year decrease, falling short of expectations and representing only 22% of the full-year estimate. Revenue declined by 8% year-over-year due to reduced demand in the Lifestyle Consumer technology domain [[1]]. The ongoing tariff situation introduces significant uncertainty into the global economic environment, affecting customer visibility [[2]].

Financial Results

Key financial figures for 1Q25 compared to 1Q24 [[2]]:

• Revenue: S\$616.6m (1Q25) vs. S\$666.7m (1Q24), a (7.5%) change [[2]]
• Net Profit: S\$55.9m (1Q25) vs. S\$60.1m (1Q24), a (7.0%) change [[2]]
• Net Margin: 9.1% (1Q25) vs. 9.0% (1Q24), a +0.1ppt change [[2]]

Key Observations

• Earnings Miss: 1Q25 earnings were below expectations due to decreased demand in the Lifestyle Consumer technology domain [[2]].
• Revenue Impact: Excluding the Lifestyle Consumer technology domain, VMS’s revenue would have increased year-over-year [[2]].
• Margin Improvement: Net margin improved by 0.1ppt to 9.1% through cost efficiency and higher-value solutions [[3]].
• Tariff Concerns: Customers express broad consensus that ongoing tariffs create significant uncertainty, with unclear visibility over the next 12 months [[3]].
• Strategic Positioning: VMS is focused on creating competitive solutions and expanding market share in several technology domains [[3]].

Key Financials

Summary of key financials from 2023 to 2027F [[4]]:

Growth Initiatives

• Hyperscale Data Centers: VMS aims to capitalize on increasing demand for hyperscale data centers and faster data interconnectivity [[5]].
• Semiconductor Equipment: Growing its share in semiconductor-related equipment, driven by AI-related demand for advanced semiconductors [[5]].
• Strong Balance Sheet: Net cash of S\$1.3 billion as of 2024, approximately 30% of its market capitalization [[5]].
• Capital Management: Executed S\$17.4 million in share buybacks in 2025 as of April 29, 2025 [[5]].

Earnings Revision

Earnings forecasts for 2025/26/27 have been reduced by 9%/11%/14%, respectively, due to lower revenue estimates reflecting weaker customer demand amid tariff uncertainties [[5]].

Valuation and Recommendation

The HOLD rating is maintained with a target price of S\$12.01, based on a long-term mean PE of 15.3x 2025F. This valuation considers delays in recovery due to geopolitical uncertainties. VMS is currently trading at approximately 14x 2025F PE, offering a dividend yield of around 6.7% [[5]].

Peer Comparison of VMS’ Clients

Peer analysis against VMS clients highlights competitive positioning [[6]]:

Financial Tables

Profit & Loss

Balance Sheet

Cash Flow

Key Metrics