In this series, we will feature one Singapore-listed company each time as a quick guide to important things you should know about it in 60 seconds.
Right now, we have Venture Corporation Ltd (SGX: V03). Previously, we featured one of three Singapore-listed banks United Overseas Bank Ltd (SGX: U11).
What’s Venture Corporation’s Business About?
Founded in 1989 and headquartered in Singapore, Venture is a global electronics services provider that can support design, manufacturing, and e-fulfilment of high-mix, high-value and sophisticated products.
Venture has domain expertise in printing and imaging, networking and communications devices, power and energy-related products, and medical equipment, among others.
Since its humble beginnings some 30 years ago, the company has expanded and today employs more than 12,000 people across Southeast Asia, North Asia, America, and Europe.
Venture became a Straits Times Index (STI) component in January 2018. It replaced Global Logistic Properties Ltd, which has since been taken private.
As of 12 May 2020, Venture’s market capitalisation stood at S$4.53 billion, making it one of the smallest companies of the STI.
Venture Corporation’s Financial Highlights
The following shows Venture’s key financial metrics from 2015 to 2019 (the company has a 31 December year-end):
|Earnings per share (Singapore cents)||55.6||64.8||126.0||127.3||125.3|
|Net profit margin (%)||5.8||6.3||9.0||10.6||10.0|
|Return on equity (%)||8.3||9.4||17.5||16.4||15.0|
|Net cash position|
Over the past five years, Venture’s revenue has grown from S$2.7 billion to S$3.6 billion while its net profit improved from S$154 million to S$363.1 million.
Along with those increases, Venture’s net profit margin grew from 5.8% in 2015 to 10% in 2019.
Return on equity (ROE), which reveals how efficient a firm’s management is in using shareholders’ capital, swelled from 8.3% to 15%. The rising ROE shows that management is doing a great job in creating shareholder value.
Another aspect to like about the company is its strong net cash position. As of 31 December 2019, Venture had S$714.5 million in cash and bank balances with just S$1.1 million in borrowings.
Venture’s net cash position has further grown to S$852.5 million in its 2020 first-quarter.
The growth is despite falling revenue and net profit in its latest quarter:
Venture Corporation’s Dividend History
Venture has paid dividends consistently since it was listed in 1992.
Its dividend paid per share has soared by almost 100 times since then, from S$0.0075 to S$0.70 last year.
Here’s a look at Venture’s dividend and dividend payout ratio in recent times:
|Total dividend per share|
|Dividend payout ratio|
With a strong balance sheet and a dividend payout ratio of a conservative 56%, Venture’s dividend sure looks safe.
Major Risk For Venture Corporation To Take Note Of
A major risk I can think of with Venture is that of customer concentration.
For 2019, more than 10% of its revenue came from just one customer.
If that customer pulls out for any reason, Venture’s business could be hit.
Venture Corporation’s Share Price And Valuation
Over the last five years, Venture’s share price has surged close to 100%.
At Venture’s share price of S$15.64 at the time of writing, the electronics service provider has a price-to-earnings ratio of 13 and a dividend yield of 4.5%.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.