Why Venture's 4Q12 income is likely to slide 8.1%

Even revenue will possibly remain flat.

According to OCBC, Venture Corporation is slated to release its 4Q12 results on 28 Feb after trading hours. The research firm is forecasting revenue to remain flat YoY at S$34.9m and PATMI to decline 8.1% YoY to S$633.2m. 

This is approximately 4.5% and 14.8% below the Bloomberg consensus estimates, respectively, due to lower operating margin assumption.

Here's more from OCBC:

We expect 4Q12 to include the maiden contribution from VMS’s agreement with Oclaro Inc. to transfer the latter’s manufacturing operations from Shenzhen to VMS’s Malaysia facility.

During Oclaro’s recent 2QFY13 results, its management said that the first product from this business transfer had been fully qualified and shipped to the customer.  

Although encouraging, contribution to VMS is likely to be immaterial initially, in our view, as it takes time for production to be ramped up. However, should this transition turn out to be better-than-expected, we believe that it would enhance VMS’s reputation as a strategic partner for global tech firms and could lead to similar business opportunities with new and existing customers.