Broker: CGS International
Date of Report: August 6, 2025
Venture Corporation Delivers Resilient 1H25 Results, Surprises with Special Dividend Amid Industry Headwinds
Overview: Venture Corporation Exceeds Expectations Despite Market Challenges
Venture Corporation, a leading Singapore-based tech manufacturing services provider, reported its first half 2025 (1H25) earnings with notable resilience amidst ongoing industry uncertainties. While revenue and net profit declined year-on-year, both figures were above or in line with full-year expectations, and the company announced a special dividend that signals confidence in its financial position. CGS International has upgraded its recommendation on the stock, citing a brighter revenue outlook into FY2027.
Key Financial Highlights: 1H25 Performance and Dividend Surprise
- 1H25 Net Profit: S\$113 million, down 8.6% year-on-year, but above/in line with consensus and internal forecasts.
- 1H25 Revenue: S\$1.26 billion, a decrease of 8.8% year-on-year, representing 48%/47% of CGS/Bloomberg full-year forecasts.
- Dividend: Interim DPS of S\$0.25, unchanged year-on-year, plus a surprise special DPS of S\$0.05, bringing total 1H25 DPS to S\$0.30.
- Net Cash: S\$1.3 billion as of end-June 2025.
- Free Cash Flow: S\$137.8 million (S\$0.48 per share) for 1H25.
The special dividend came after strong shareholder feedback at the April 2025 AGM, highlighting management’s responsiveness and the strength of Venture’s balance sheet. The company continues to defend its 8-10% net margin target, achieving a 9.0% margin in 1H25.
Quarterly Trends: Revenue Recovery and Segmental Performance
- Q2 2025 Revenue: Up 4.7% quarter-on-quarter, driven by Portfolio A (up 2.6%) and Portfolio B (up 6.0%).
- Key End-Markets: Growth in life sciences, medical, semiconductor, test & measurement, and advanced industrial segments offsetting ongoing softness in the lifestyle domain.
Management attributes the recovery to increasing demand from major customers in defensive sectors and its ongoing investment in R&D and operational efficiency.
Strategic Outlook: Navigating Uncertainty, Investing for Growth
Despite headwinds such as tariff uncertainties and weakness in the lifestyle segment, Venture is actively pursuing new opportunities and broadening its customer base. The company is leveraging its R&D strengths and operational capabilities to drive long-term growth and value creation. Management remains committed to expanding market share, especially as global companies diversify production away from China to Malaysia.
Upgraded Recommendation and Financial Forecasts
CGS International has upgraded Venture Corporation to “Add” with a new target price of S\$13.45 (up from S\$12.14), rolling forward valuation to FY27F. The valuation is based on 14.5x FY27F P/E, matching the company’s 20-year historical average.
- Re-rating Catalysts: New product launches, faster-than-expected revenue growth from production diversification.
- Downside Risks: Supply chain disruptions, worsening global economic conditions.
- Consensus Ratings: 2 Buy, 7 Hold, 1 Sell.
- Current Price: S\$12.72
- Target Price: S\$13.45 (5.7% upside)
- Market Cap: S\$3.66 billion (US\$2.85 billion)
Recent key changes include a 0.5% reduction in share count due to buybacks and modest opex reductions, resulting in 2.1-6.3% upward revisions to EPS forecasts for FY25F-FY27F.
Comprehensive Financial Table
| Financial Summary |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Revenue (S\$ million) |
3,025 |
2,736 |
2,634 |
2,659 |
2,712 |
| Net Profit (S\$ million) |
270.0 |
245.0 |
226.4 |
245.8 |
266.9 |
| Core EPS (S\$) |
0.94 |
0.85 |
0.79 |
0.85 |
0.93 |
| Core EPS Growth |
(26.9%) |
(9.5%) |
(7.1%) |
8.6% |
8.6% |
| DPS (S\$) |
0.75 |
0.75 |
0.80 |
0.75 |
0.75 |
| Dividend Yield |
5.90% |
5.90% |
6.29% |
5.90% |
5.90% |
| Net Gearing |
(36.3%) |
(44.4%) |
(47.5%) |
(47.8%) |
(48.2%) |
| ROE |
9.52% |
8.56% |
7.84% |
8.48% |
9.08% |
Peer Comparison: Venture’s Position in the Global Tech Manufacturing Sector
| Company |
Ticker |
Recommendation |
Price (Local) |
Market Cap (US\$ m) |
CY25F P/E |
CY26F P/E |
3-Year EPS CAGR (%) |
P/BV (x) |
ROE (%) |
Dividend Yield (%) |
| Venture Corporation |
VMS SP |
ADD |
12.72 |
2,840 |
16.7 |
15.2 |
2.4 |
1.27 |
7.4 |
5.9 |
| Benchmark Electronics |
BHE US |
NR |
39.11 |
1,404 |
17.0 |
15.6 |
n/a |
1.28 |
6.3 |
1.8 |
| Celestica Inc. |
CLS US |
NR |
196.5 |
22,621 |
35.4 |
29.4 |
29.6 |
11.17 |
31.2 |
0.0 |
| Flextronics International |
FLEX US |
NR |
50.54 |
18,969 |
23.6 |
15.6 |
17.3 |
3.71 |
21.8 |
n/a |
| Jabil Circuit |
JBL US |
NR |
219.6 |
23,568 |
22.1 |
19.4 |
-7.9 |
15.84 |
65.2 |
0.1 |
| Plexus Corp |
PLXS US |
NR |
130.5 |
3,523 |
18.3 |
17.4 |
6.7 |
2.39 |
13.9 |
n/a |
| Sanmina-SCI Corp |
SANM US |
NR |
117.1 |
6,237 |
19.1 |
n/a |
n/a |
2.67 |
13.9 |
n/a |
Venture stands out with a solid dividend yield and stable ROE, positioning itself as a resilient player among global tech manufacturing peers.
Segment Details: Portfolio A and B Explained
- Portfolio A: Life Science, Genomics, Molecular Diagnostics, Medical Devices, Healthcare Technology, Lifestyle Consumer Tech, Health Improvement Products.
- Portfolio B: Instrumentation, Test & Measurement, Networking & Communications, Security & Safety, Building Automation, Industrial IoT, Fintech, Computing & Productivity, Advanced Industrial Tech, Semiconductor, Printing & Imaging.
ESG Insights: Performance and Investor Implications
- ESG Combined Score: C+ (Refinitiv/LSEG), maintained from FY20 to FY22.
- Transparency: Runner-up for Most Transparent Company (Tech Category) by SIAS in 2022.
- Customer Concentration Risk: One major customer accounted for >10% of revenue in FY23 (down from two in FY22). Loss of such customers would negatively impact Venture.
- Controversy: Venture is involved in manufacturing e-cigarettes, which may constrain certain investors.
- Environmental Trends: Carbon emission intensity increased slightly from 26.77 TCO2e/S\$m in 2023 to 27.14 in 2024. Venture is taking steps to reduce energy usage (LED lighting, efficient air conditioning).
Capital Structure, Key Ratios, and Cash Flow Strength
- Total Cash and Equivalents (2025F): S\$1.4 billion
- Inventories (2025F): S\$535 million
- Shareholders’ Equity (2025F): S\$2.88 billion
- Net Cash Per Share (2025F): S\$4.76
- Operating EBITDA Margin (2025F): 10.0%
- Net Dividend Payout Ratio (2025F): 83.3%
- Accounts Receivables Days (2025F): 91.26
- Inventory Days (2025F): 114.2
- ROIC (2025F): 14.7%
Conclusion: Venture Corporation’s Outlook in 2025 and Beyond
Venture Corporation has demonstrated resilience in a challenging environment, maintaining profitability, strong cash flow, and rewarding shareholders with both regular and special dividends. With a robust balance sheet, prudent cost management, and a focus on R&D-driven growth, the company is well-positioned to benefit as end-market demand recovers and global supply chains diversify. The upgraded “Add” rating and raised target price reflect a cautiously optimistic outlook, with continued attention to customer concentration, ESG considerations, and evolving industry dynamics.
