MAYBANK Securities has raised its target price for Venture Corporation : V03 0% to S$15.50 from S$15.40, as it anticipates a rise in orders for the mainboard-listed manufacturer in FY2024.

In a report on Tuesday (Jan 30), Maybank analyst Jarick Seet estimated that mass production for some of Venture’s new production introductions likely started in the fourth quarter of 2023, with more slated in FY2024 for new and existing customers.

The mass production, coupled with signs of inventory depletion among Venture’s customers, could mean more orders in FY2024, he said, adding that this will likely lead to higher operating margins due to a rise in operating leverage.

Seet said that Maybank is now “more confident” that Q3 2023 was the bottom for the group, and that it expects growth in both revenue and profit after tax and minority interests (Patmi) in FY2024.

Maybank believes Venture will see a “gradual steady recovery” from FY2023, he added. The brokerage maintained its “buy” call on the counter.

“With a yield of 5.6 per cent, a strong balance sheet and an active share-buyback programme, we believe that Venture will likely be a safe haven for investors,” said Seet.

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He noted that the group’s recent share buyback and cancellation of 10 million shares is a “strong indication” that management believes the stock is undervalued. “We expect earnings per share to be positively impacted as more shares are purchased after the blackout period.”

For FY2023, Maybank expects Venture to post full-year revenue of S$3 billion and Patmi of S$270 million. It also forecast that the group’s Q4 performance, to be released on Feb 22, will beat the previous quarter. 

The brokerage raised its Patmi forecast by 1.2 per cent for FY2024, and by 3.8 per cent for FY2025, leading to the higher target price of S$15.50. This implies a potential upside of 20 per cent from the counter’s trading price of S$13.52 as at 12.32 pm on Wednesday. 

The counter was trading 0.6 per cent or S$0.08 lower at that time.