A Look at Venture Corp’s 2Q Results

Venture-Corp logo In a previous article, we looked at how Venture Corporation Limited (SGX: V03) is considered as one of Singapore’s top yielding Mid-Caps. Founded in 1984, Venture Corp has become a leading global provider of technology services, products and solutions. It designs and develops electronic and mechanical solutions for manufacturers and supply chains.

As per the earnings release for 2Q 2013, Venture Corp recorded revenue of S$587.7 million, a minor decline of 3.9% compared to S$611.8 million for the preceding year. Net profit also dropped by 10.4% from $33.6 million to S$30.1 million, mainly due to higher income tax provision for the reported quarter. The higher tax charged is mainly associated to a one-off gain on disposal of its available-for-sale investments.

Venture corp quarterly performance

Although 2Q 2013 turnover has been flat as compared to prior year, Venture Corp managed to perform better than its previous 1Q 2013 earnings. This is in line with the outlook statement claiming that: “Demand from most existing customers is showing signs of recovery. The Group will also benefit from increasing revenue contribution from customers won in 2012 and new products launched recently.”

On the other hand, there appear to be some areas of concern. Inventories and Trade payables are increasing steadily, indicating that the company is taking longer period of time to sell its inventory and payment owed to suppliers are delayed.

While Venture Corp remains in a net cash position with over S$200 million, it seems that the revenue has not been able to keep up with the dividend payouts as the recent dividend declared of S$ 0.50 was a notch lower than S$ 0.55 for the previous year.

At Tuesday’s closing price of S$ 7.18, Venture Corp is trading at 15.34 times earnings and offers a dividend yield of 6.96%. While the relatively high dividend payouts are secured by its huge array of diversified operations, it remains to be seen on how Venture Corp can reverse the declining trend for its earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.   Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.