A NEGATIVE results guidance issued by electronics giant Plexus prompted CGS-CIMB to cut its target price for Venture : V03 0%to S$15.90 from S$16.61, though it maintained its high-conviction “add” rating on the Singapore-listed technology counter.

This came after Plexus on Jan 16 announced a lower first-quarter revenue guidance amid continued market-driven inventory corrections and incrementally weaker demand from the healthcare, life sciences and industrial sectors.

Citing Venture’s recent attribution of its lower nine-month net profit to softer demand and inventory adjustments from its customers, CGS-CIMB said it thinks the read-through from Plexus could suggest continued demand weakness for Venture in Q4 FY2023.

It also noted slower revenue growth expectations for Venture’s customers based on Bloomberg consensus estimates. 

CGS-CIMB consequently lowered its FY2023 to FY2025 revenue forecasts by 0.5 to 2 per cent, while reducing its earnings per share forecasts for the same period by 1.3 to 7.2 per cent.

On Wednesday (Jan 24), the research house said it now expects Venture to report a 27.9 per cent year-on-year fall in FY2023 net profit to S$266.6 million, with fourth-quarter earnings declining 35.4 per cent on the year to S$66.3 million.

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Its dividend per share forecasts over FY2023 to FY2025, however, remain intact at S$0.75.

The lower target price indicated an unchanged 14.6 times price-to-earnings multiple based on CGS-CIMB’s FY2025 estimates for Venture, which were in line with the stock’s 15-year average.

Shares of Venture were down S$0.27 or 2 per cent at S$13.61 as at the midday trading break on Thursday.