Venture Corp third-quarter PATMI up 7.7% to S$35.1m

Despite 3.4% fall in revenues.

Venture Corp (VMS) announced its 3Q13 results, revealing revenue falong 3.4% YoY to S$588.5m but with PATMI rising 7.7% to S$35.1m.

"This was due largely to a higher gross margin of 23.9% (+2.1 ppt) and lower forex adjustment loss, but partially offset by a gain on disposal of associate of S$1.6m in 3Q12," said OCBC Investment Research.

"Sequentially, topline was flat but bottomline jumped 16.6%. This set of results was within our expectations, with 9M13 revenue of S$1,706.7m (-4.9%) and PATMI of S$93.1m (-8.4%) constituting 74.2% and 69.1% of our FY13 forecasts, respectively. We are expecting further sequential improvement in VMS’s financial performance in 4Q13," the research firm added."

Analysing its segment performance, OCBC said that VMS’s weakest performer came from its Printing and Imaging (P&I) division, which recorded a 28% YoY decline in revenue to S$78.2m.

"Nevertheless, we believe the situation is recovering as HP, one of its key customers in this segment, recently highlighted that it managed to grow its printing hardware unit sales for the first time since 2011, while topline is also stabilising," said OCBC.

"Besides HP, VMS has 18 other P&I customers (as at end 2012), and management updated us that it is also seeing signs of improvement in these customers," it added.

While the global economic recovery remains modest, OCBC said that Venture Corp's management will adopt a four-fold strategy focusing on i) increasing its market share with existing customers, ii) capturing new customers, iii) penetrating new business segments with growth potential and iv) enhancing R&D efforts to come up with innovative products.

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