Venture Corp reports slow start in 2012

Profit after tax and minority interests down by 13% in 1Q12 but optimism skewed towards 2H.

Here's from OCBC Investment Research:

Venture Corp (VMS) reported a 13.7% YoY decline in its 1Q12 PATMI to S$35.5m on the back of a 2.3% drop in revenue to S$574.3m. This formed 22.3% and 20.6% of our full-year forecasts, respectively. Results were within our expectations, as we are expecting progressive improvement in VMS’s operations, with FY12 likely to be a back-end loaded year.

Sequentially, revenue fell 9.2%, while PATMI slid 6.6%, due mainly to seasonal factors. Net margin declined from
7.0% in 1Q11 to 6.2% in 1Q12, but showed a 0.2ppt gain from 4Q11, staying within VMS’s target margin band of 6-8%.

Despite the slow start to the year, VMS remains fairly optimistic about its outlook for FY12, although there is still some level of uncertainty for 2Q

We expect conditions in 2Q to stay relatively sluggish, but foresee sequential improvement from 1Q. Sentiment
from its customers remain encouraging, with contribution from new product launches and
customers coming on stream more strongly in 2H12.

In particular, management sounded particularly upbeat about its Medical and Life Science business. VMS has gained traction in this field over the past 2-3 years, and sees good scalability moving forward. In addition, management opined that outsourcing for this segment is currently only in the early stage.

Given that VMS has already established a first mover advantage by developing a solid customer base in this area, we believe that there is strong potential for robust growth ahead as the outsourcing trend picks up.

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