Venture Corp to have a stable 2020 as Phase 1 deal commences: analyst

The firm has been receiving enquiries regarding new projects outside China.

Venture Corporation’s profits will likely benefit from the signing of the Phase One deal, where the US looks to cancel tariffs that were due to come into effect in December 2019, according to a note by CGS CIMB.

This will provide Venture Corp more flexibility to operate as they have been receiving more enquiries to start projects outside China. However, CGS-CIMB warned that the revenue contribution arising from the trade tensions will still take some time to grow in significance.

Furthermore, the refurbishment of Venture’s facility at Milpitas was completed at end-December 2019. The firm is expected to gradually fill the space with small batch manufacturing and could be used as an innovation centre with possible incubation of new technology companies.

However, one of its major customer Illumina (IILMN) could disturb Venture’s positive growth outlook as its revenue growth target for 2020 wnet lower than analysts’ expectations. “IILMN also expects FY20 NovaSeq shipments to be lower yoy which could be a negative for Venture,” said William Tng, analyst at CGS-CIMB.

On a separate note, Tng expects Venture’s Q4 2019 results to be released on 27 February with net profit coming in at $85.5m. This figure is 20.6% YoY lower but 0.3% QoQ higher. Upside risks will likely be successful new product launches by its customers, whilst slower orders from customers are a key downside risk.