Maybank KimEng upgraded contract manufacturer Venture to Buy from Hold, saying the around 18 percent drop in its share price since late April has created an entry point.
“Given the earnings volatility, we favor Venture [among Singapore technology plays] due to its more secure longer-term prospects,” the brokerage said in a note Monday.
It pointed to a resumption of growth from a broad base of more than 100 customers and its ability to maintain an around 10 percent net margin from value-add with its customers.
“VMS notes the U.S.-China trade war has been a catalyst for customer wins. These could contribute more meaningfully in the next one to two years,” the note said.
However, the brokerage said it still expected earnings volatility as customers’ transition their products and delays in new product introductions across multiple customers.
Maybank KimEng said it expected Venture would provide more clarity in its second quarter results on the Huawei ban impact, whether new product launches would proceed as scheduled and the overall outlook for its customers.
The brokerage kept its earnings forecasts and S$19.74 target price unchanged.
The stock ended Wednesday up 0.19 percent at S$16.14, after touching levels as high as S$19.39 in April.
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