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Venture Corporation Ltd’s Latest Earnings: What Investors Should Know

Venture Corporation Ltd  (SGX: V03) reported its second-quarter earnings last Friday. The reporting period was for 1 April 2016 to 30 June 2016.

As a quick background, Venture Corporation is an electronics manufacturing services provider and it has expertise in a wide range of activities: printing & imaging, networking & communications, retail store solutions & industrial, computer peripherals & data storage and test & measurement / medical & life science / others. The firm sources its revenue primarily from the Asia Pacific region.

You can read more about the company in here and here.

Financial highlights

The following’s a quick take on some of Venture Corporation’s latest financial figures:

  1. Revenue for the second-quarter came in at $683.3 million, up 3.4% compared to a year ago.
  2. Net profit attributable to shareholders grew 20.3% year-on-year to $43.4 million.
  3. Consequently, earnings per share (EPS) for 2016’s second-quarter was 15.6 cents, a 19% increase from the second-quarter of 2015.
  4. Cash flow from operations came in at $33.6 million for the second-quarter of 2016 with capital expenditure clocking in at $11.4 million. As such, free cash flow was over $22 million for the reporting quarter, down slightly from the $23.5 million seen a year ago ($29.1 million in cash flow from operations and $5.6 million in capex).
  5. As of 30 June 2016, Venture Corporation had $377.5 million in cash and equivalents and $92.7 million in borrowings. This is an improvement from a year ago when there was $329.8 million in cash and equivalents and $174.8 million in borrowings.

In all, Venture Corporation registered a minor increase in revenue, but managed to put in a strong increase in profit. The electronics services provider also reported positive free cash flow and still maintains a strong balance sheet.

Operational highlights and a future outlook

Venture Corporation’s management summed up the quarter with a few words in the earnings release:

“The Group continued to strengthen its overall performance in spite of persistently challenging economic conditions. This was primarily driven by strong value creation and increased traction with several of its customers, a result of Venture’s deep-bench, differentiating engineering capabilities and its relentless drive for operational excellence.”

The company also had the following outlook:

“Going forward, business sentiment is anticipated to remain mixed across the Group’s diverse customer-base. However, this customer diversity across niche and strategic technology domains and market verticals can indeed provide stability and resilience to its long-term overall performance.

Venture is well positioned to invest in building greater depth and strengths in engineering and R&D, as well as advanced manufacturing capabilities and supply chain processes.

New strategic initiatives, built upon Venture’s core values, will drive its energised organisation to strive for new peaks of excellence and high performance alliances with its global partners and customers.”

At its closing share price of $8.90 last Friday, Venture Corporation traded at 15 times trailing earnings with a trailing dividend yield of 5.6%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.