Investors hold on to Venture stocks amidst slower earnings

But the firm’s profits need to breach +20% to beat expectations, an analyst said.

Amongst other benchmark stocks that investors in Tokyo and Hong Kong continue to hold onto, Venture Corporation was one of the companies that experienced slower earnings.

However, according to CGS-CIMB, the stock remains “widely held” despite its the decline in its profits.

CGS-CIMB analyst Lim Siew Khee noted that investors were cognisant of the Phillip Morris issue and slower yoy earnings growth after its “super profit” in 2017. “Those with stock-picking mandates lamented the lack of high conviction stocks with more than 30% returns that are reasonably priced,” she added.

“We highlighted that to beat consensus earnings expectations of +15% YoY in 2018, Venture needs to consistently achieve +20% YoY in 2Q-4Q2018F profits, which could be a tall order in 4Q2018F as 4Q2017 net profit was $143m,” she said.

It’s not only the investors that are hopeful towards the company. A Maybank Kim Eng report previously said that Venture is banking on its US customers that remain confident about their 2018 prospects.

Of its 16 well-known customers, 10 beat Street estimates. Meanwhile, 12 have raised or reaffirmed their guidance. Consensus revenue for most of these customers has been raised for FY2018/2019.

Meanwhile, the interest in the remaining tech space in Singapore was mixed. “Some were curious if AEM Holdings has room for earnings growth whilst some would play the tech space via US markets,” Lim added.