Venture Corp's bottomline impacted by sales slowdown in Q3

The weakness will persist for several quarters.

Venture Corp’s net profit failed to reach analysts’ expectations in Q3, in spite of the fact that it rose 3.2% year-on-year to $36.1m.

Venture Corp's net profit underperformed OSK DMG’s estimate because of a persistent sales weakness in its computer peripherals and data storage segment.

“Computer peripherals and data storage sales slipped 17.7% to SGD167.8m for 9M14 from SGD204m in 9M13. This was mainly due to a drop in orders from its key customers, who have recently undergone merger and acquisition (M&A) activities. We expect weakness to persist in the next few quarters, with a slow recovery in orders. Going forward, growth will be likely driven by its test and measurement business segment.” noted OSK DMG.

Here’s more from OSK DMG:
Ventures’ 3Q14 revenue inched up 1.7% YoY to SGD599m while NPAT rose 3.2% YoY to SGD36.1m. However, its 9M14 NPAT of SGD100.5m only made up 70% of our FY14 estimate of SGD143m.

This prompted us to trim our FY14 NPAT estimate by 2.8% to SGD139m, resulting in a lower TP of SGD7.50 from SGD7.71 (0.7% downside, 14.8x FY14 P/E). Going forward, we still expect management to keep up with the SGD0.50 annual dividend.

Venture’s 3Q14 topline increased slightly by 1.7% YoY to SGD599m from SGD588m, while its bottomline inched up 3.2% to SGD36.1m from SGD35m.

Typically, we expect the second half of the year to be stronger than the first, but we did not see much improvement during 3Q14. As a result, 9M14 NPAT of SGD100.5m only made up 70% of our estimates.

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