How long can Venture hold against trade tensions?

It indicated a lack of end-market visibility for Q4 2019.

Whilst Venture Corporation so far was able to hold its fortress against intensifying trade tensions, the company has articulated the lack of end-market visibility for Q4 2019, analysts said.

In a note, Maybank Kim Eng said, “New products across multiple domains will be launched in Q3 2019, with mass production in Q4 2019. Whilst this is a positive sign, lack of visibility pertaining to Q4 2019 end-market demand is something that we are mindful of.”

OCBC Investment Research noted however that Venture remains positive on opportunities within the life sciences and oncology space as these areas are expected to exhibit more secular growth.

Also read: Venture Corp profits fell 7.3% to $90.81m in Q2

“We understand that most of its seven technology domains are growing (except advance payment solutions), with many customers’ solutions at the early stage of their growth curves. We continue to believe that the ongoing trade tensions are positive for the group, given its facilities in Malaysia and Singapore, though the contribution is not expected to be significant in the near-term,” OCBC Investment Research said.

Maybank KE analyst Lai Gene Lih concurred and said, “Venture’s footprint for advanced manufacturing in Malaysia and Singapore is an advantage in context of the US-China trade war, in our view. VMS’ customers are also leveraged to exciting trends in genomics, food safety and 5G infrastructure. This may cushion the impact of reduced corporate capex amid increasing cautiousness.”

Due to customers’ product transitions, Venture’s Q2 revenue fell 5% YoY. “We see this as a resilient achievement, given the high base comparison from Q2 2018 and rising macroeconomic headwinds,” Lai added.

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