Venture Corp

[Some-one]

Hi Someone and Alphaquant,

Thank you for your comments. I am not really convinced by the bullish report too, since the main agreement is the sequential quarters improvement in 2013. I saw that report before, if I am not wrong, it is issued in 1H, and venture has delivered further 2 quarters of better growth,but 2H is traditional a better half, as conceded by the chairman.

I notice that the bulk(almost all) of revenue is generated in asia-pacific including singapore. It seem to means Venture is supporting the back-end suppliers of consumer/industrial products rather than consumer/industrial products producers themselves.

Anyway, I am not looking Venture as a grower, but rather as a cyclical recovery play.

Looking at the results, it is the worst in 13 years! Reading the AR over the years( I only managed to read backwards till 2009), its capabilities and competencies seem rather intact. Margin as Alphaquant point out is between 5-6%, not actually razor thin consider the costs pressures and the industry it is in. Most of the time, they do seem to deliver what they set to do, e.g. 2009-2010, they mention about developmental project on retail solutions, pay system, and in 2012-2013, they did roll out the POS products and the revenue did improve. Of course, there are misses too, like they mention they make inroads into aerospace with an european company, but never heard of it since.

Net net, it does not seem to be a dying company struggling/or managing decline. Hence the important question, is there anyway to track the customers, although most might be project based, and is Venture able to gain market shares as Asia tech export improve?

AS for Aberdeen selling, I am not too concerned, they have been buying and selling at various time, in 2011 and 2012, they are net buyers, in recent time, they are net sellers, but they are not dumping their shares.

As for renewal, they did expect their team in 2011-2012,but they are in the very late 50s too, and is not tested. so yea, a bit of concern there.

Comments welcome.

I have been to their AGM over the years including one where Aberdeen (a Caucasian is representing it) has a clash with the minority shareholders over the voting system.

They have been saying that they are trying to maintain a margin of more than 6% but their NPM is slightly below it. They does not seem to have any more ways to deliver better performance. My guess is that the Chairman and CEO, Mr. Wong, does not have a better idea in improving the business and basically uses its dividends to attract shareholders.

Yes. A lot of the shareholders are very happy over the huge dividends but I have doubts over the company been able to sustain it in the future. They just cut their dividends from 0.55 to 0.50. At the current price of 7.4, it is less than 7 if you minus away the 0.5 dividend and I believe after xD, it would probably fall to 6.8.

As for recovery play, I really don't see how they can recover. Are we saying that electronics export has been in a slump from 2010 to 2013? I thought we should be recovering from 2010 to 2013 since the GFC happens around 2009 to 2010.

There are two ways which I think the company can improve.

1. Change the CEO. I spoke to Mr. Wong before and to me, he does not seem to have the passion to explore new business opportunities and prefer status quo.
2. Find new businesses instead of staying in electronics. Margin would be depressed even more when companies in China took away Venture's market shares with cheaper labour.

Furthermore, since they do not have any retained earnings, they would not be able to acquire other businesses to expand its products. They have to depend on their customers and their own workforce to come out with new products. However, it seems there are no game-changer any time soon.