Rocky timelines for product launches plagues Venture Corp

Net margins are expected to be tighter in the same period.

Despite Venture Corporation’s 5.5% YoY profit growth to $85.2m in Q3, the firm’s Q4 results are projected to decline to about $80m due to delays in the launch of new product initiatives and the product transition period on that back of an uncertain outlook, according to a note by DBS Research.

Venture Corp had released its Q3 profits last week, saying that the slight profit increase was supported by productivity gains and operational efficiency. However, DBS noted that its net margin slowed down to 9.8% in Q3 from 10.5% in Q3 2018 and 10.1% in 2Q19, no thanks to competition and pricing pressure.

The report also added that its Q3 results were below their expectations.

“Margins could have been weaker if not for the group’s continued initiatives to drive productivity gains and operational efficiency,” said Lee Keng Ling, an analyst at DBS Research. ”Expect a weak Q4; H2 earnings could be lower than H1. Historically, VMS’ 2H is usually stronger than its 1H.”

However, Ling said that they are expecting to see traction in its entry into new technology domains and ecosystem as Venture Corp will be supporting several partners in their new and key product launches over the next 12 months.

“We remain positive on VMS’ ability to monetise its unique offerings, know-how and hard-to-replicate ecosystems. VMS’ strong net cash position should support expectations of a repeat of the higher 70-Sct dividend per share (DPS) in FY19F, which works out to a yield of 4.2%,” Ling noted.