Venture shares fall despite profit more than doubling in 2017

Singapore two-dollar billsSingapore two-dollar bills

Venture’s shares lost 3.01 percent to S$26.73 by 10:53 A.M. SGT Thursday despite reporting after the market close on Wednesday that its earnings surged.

That’s likely as the stock has already climbed more than 30 percent so far this year.

For the full year, Venture said after the market close that its net profit more than doubled to S$372.8 million on record revenue of S$4.0 billion, which was a nearly 40 percent on-year rise. Venture said its fully diluted earnings per share (EPS) for 2017 was S$1.30, more than doubling on-year.

CIMB said in a note on Thursday that full-year core net profit came in 2 percent above its forecast.

Customers seeing revenue growth

It pointed to management comments that around 75 percent of customers were still seeing revenue growth, while around 7 percent of customers had flattish revenue.

CIMB also noted that margins are on the rise.

“In line with its strategy to create value for customers and embed itself as a key design/manufacturing partner among customers, quarterly net profit margin expanded further to 13.2 percent in the fourth quarter of 2017,” CIMB said. “Throughout full-year 2017, quarterly net margins have been on the rise.”

It noted that 2017’s  net margin of 9.3 percent was the highest since 2002 despite the rise in effective tax rates from 5.2 percent in 2002 to 16.0 percent in 2017.

The combination of strong revenue growth and margin expansion led CIMB to raise its earnings per share (EPS) forecasts for 2018-2019 by 5.8-7.5 percent.

CIMB raised its target to S$30.81 from S$29.13, keeping an Add call.