Venture shares may extend their surge after 2017 net profit more than doubles

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Shares of Venture may continue their relentless climb after it reported earnings surged.

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.

That was a tad below some forecasts from brokerage UOB KayHian last week, which estimated revenue of S$4.112 billion and EPS of S$1.31. But net profit pipped the brokerage’s forecast of S$371 million and handily beat what UOB KayHian said was the consensus forecast for S$329 million.

To be sure, UOB KayHian was very bullish on the share. Analyst Foo Zhi Wei’s report last week, subtitled “This changes everything,” said that the brokerage’s investigation had found “strong evidence” that Venture was the manufacturer of a “leading consumer device” for a U.S.-based multinational company.

The mystery product

The report estimated Venture would “easily” be worth more than S$33 a share if UOB KayHian’s predictions pan out about that product, which it didn’t name, getting approval to be marketed in the United States.

The truth of that claim may remain a mystery for the moment.

The Business Times reported on Wednesday that CEO Wong Ngit Liong declined at the results briefing, held at the company’s headquarters in Ang Mo Kio, to reveal the identities of Venture’s largest customers.

But the stock may get an additional fillip from the company raising its final dividend by 20 percent on-year to 60 Singapore cents a share.

In its release, the company offered both a positive outlook and a word of caution.

“Venture remains confident that it is well-placed to create significant value for the benefit of its partners,” it said. “However, it is expected that the business environment may remain volatile.”

The stock closed up 1.7 percent at S$27.56 on Wednesday. That’s after a solid march higher over the past year, including a more than 30 percent rise year-to-date.

The February high of S$27.60 may not offer much resistance on the upside.