Venture Corp. Ltd. – Value Analysis (SINGAPORE:V03) : December 26, 2017

Capitalcube gives Venture Corp. Ltd. a score of 75.

Our analysis is based on comparing Venture Corp. Ltd. with the following peers – Vicom Ltd, Huan Hsin Holdings Ltd, Ipco International Limited. and Ley Choon Group Holdings Ltd. (V01-SG, H16-SG, I11-SG and Q0X-SG).

Investment Outlook

Venture Corp. Ltd. has a fundamental score of 75 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • It currently trades at a Price/Book ratio of (2.83).
  • The market expects V03-SG to grow faster than its peers and for the company to improve its current ROE.
  • V03-SG has relatively low net profit margins while its asset efficiency is relatively high.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • Over the last five years, V03-SG‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • Compared with the peers chosen, V03-SG has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • V03-SG has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

V03-SG has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 1.44% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 61.09%), and a well-cushioned interest coverage level of 339.25x, V03-SG can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include V01-SG.

V03-SG has maintained its Quick & Able profile from the recent year-end.

  • V03-SG‘s interest coverage is its highest relative to the last five years and compares to a low of 80.56x in 2012.
  • Though its interest coverage increased to 339.25x from 263.08x (in 2016), its peer median remained relatively stable during this period at 1.06x.
  • Interest coverage rose 76.35 points relative to peers. It is also above the 2.50x coverage benchmark unlike the peer median.
  • V03-SG‘s debt-EV is its lowest relative to the last five years and compares to a high of 8.71% in 2014.
  • The decrease in its debt-EV to 1.44% from 3.94% (in 2016) was also accompanied by a decrease in its peer median during this period to 61.09% from 75.68%.
  • Relative to peers, debt-EV rose 12.09 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Vicom Ltd 0 4.18 No interest exp 999
Huan Hsin Holdings Ltd 101.02 0.35 -8.77 -1.61
Ipco International Limited. 84.02 0.83 1.06 13.9
Ley Choon Group Holdings Ltd. 61.09 1.46 0.32 16.2
Venture Corporation Limited 1.44 2.11 339.25 520.68
Peer Median 61.09 1.46 1.06 16.2
Best In Class 1.44 4.18 No interest exp 999

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Company Profile

Venture Corp. Ltd. engages in the provision of technology services, products, and solutions. It operates through the following business segments: Electronics Services Provider, Retail Store Solutions and Industrial, and Component Technology. The company was founded in 1984 and is headquartered in Singapore.

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