Friday, May 6, 2016

Update on Venture Corp

Venture continue to recover YoY.

Recovery is not broad base but driven largely but it's Test & Measurement/medicial/ Others Segment. Management has concede Retail Store solution and Industrial Products is one of lower margin segment and with the improving Margin coinciding with the growth of the test and measurement segment, I think we can draw the link that this segment has better margin most properly due to it being HMLV type of EMS. If u like Acromec due to its exposure to healthcare segment (was reading up on it due to a write up by a blogger), I think U would like Venture more. It's 2 different business but Venture  
EMS business has a longer "recurring" probability at long as clients keep their production lines running, Aecromec on the other hand is project based and has not overseas track records although they said they wanted to break into ASEAN markets. 

Printing segment is still in doldrums. I believed the 3D prototype touted by analyst did not translate into firm contract, as it has been a year since news break. 

The Penang factory ramped up also did not seem to materialize as network and communication segment is still weak. 

However, since the largest segment is growing strongly and the rest limbing along, I believe "growth" is under appreciated.

Next, Venture recorded its first share buy back since 2013. It might be more due to their  employees reward scheme than 
Management assessment that it's company is undervalued. When Venture buy back its shares, it seldom is a lone wolf operation.

Valuation at PE 15 is not "cheap" but I thought it's fair with its net cash position of almost $1.45 and dividend yield of 6.1%

Can Venture grow to its former glory? I hope it find a yield accretive business to acquire to capture investors' attention again like what happened when it's trading at 24 time PE, since it does have no lack of cash.

It has been a long time since I do company prospecting type of writing. Getting rusty. 


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