SG: Venture Corp - Recovery in sight

VENTURE CORPORATION 3 Apr 2012

RECOVERY IN SIGHT - More optimistic industry data - Sanguine on growth prospects - Upgrade to BUY; higher S$9.41 FV We expect Venture Corp's (VMS) FY12 earnings momentum to gain traction progressively after the seasonally weak first quarter. This is supported by the more optimistic industry data, new product launches and expected stronger contribution from several key customers. Looking ahead, we are positive on VMS's strategic focus to move up the technological value chain as this would allow room for margin expansion and enhance its 'stickiness' with its customers. We finetune our assumptions following a change of analyst coverage, and raise our fair value estimate from S$7.83 to S$9.41 as we ascribe a higher valuation peg of 15x (previously 12.5x) to VMS's FY12F EPS. This is supported by improving prospects of the group, coupled with growing market risk appetite. Upgrade to BUY.