Lively R&D could offset Venture's production weakness
Its R&D could sustain its elevated activities in the coming quarters.
Venture’s production weakness could get a lift from the firm’s reasonable research and development (R&D) projects, UOB Kay Hian (UOBKH) said.
“Given the cost-plus model, Venture has some degree of control that may help offset weakness on the production front,” the research firm said. “We expect R&D expenses to remain elevated in the coming quarters.”
Moreover, the firm’s slowing growth could be offset by its test and measurement/Med (T&M/Med) segment.
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“The broad read across the financial results of firm’s clients is slowing growth, with some slipping into negative growth,” UOBKH noted. “Stronger growth from clients in the T&M/Med segment helps offset this slowdown although it remains difficult to believe they can drive H2 2018 earnings to outperform on a YoY basis.”
For the second quarter of 2018, Venture Corporation’s profits jumped 40.2% to $97.91m from $69.84m last year. However, revenue dipped 6% to $952.28m from $1.01b.