Analysts split on Venture’s outlook, even as share price hits one-week high
DBS and RHB upbeat on improving order momentum, CGSI flags valuation risks from weaker US economic outlook
Analysts are divided on Venture's outlook despite its shares hitting a one-week high on November 11, continuing a broader recovery in technology stocks. The company's stock rose 6.5% to S$15.49 by the midday trading break, marking its highest level this week. This surge followed gains in other technology counters, such as AEM, UMS Integration, and CSE Global, which rebounded after a sell-off last week.
The decline in Venture's share price was attributed to concerns over artificial intelligence spending, regulation, and investment returns affecting the semiconductor, technology hardware, software, and telecommunications sectors. Despite this, two brokerages, RHB and DBS, remain optimistic about Venture's prospects.
RHB raised its target price for Venture to S$21.97 from S$20.78 and increased its earnings forecasts for FY2026, FY2027, and FY2028 by 2%, 3%, and 5% respectively. Their analyst, Alfie Yeo, attributed this optimism to stronger-than-expected customer order momentum during the third quarter and expects this momentum to sustain growth in the following quarters.
DBS analyst Lee Keng Ling also expressed optimism, citing Venture's improving earnings momentum, strong net-cash balance sheet, and a "compelling" dividend yield of around 5% as reasons for her confidence. She noted that the easing of net margins, partly due to higher component procurement costs, would be offset by the company's recovery supported by sustained customer demand, new product introductions, and market share gains.
However, CGS International took a more cautious stance, cutting its target price for Venture to S$18.10 and maintaining its "add" recommendation. Analyst William Tng highlighted component shortages and higher component prices, which could weigh on gross margins by 0.7 to 0.8 percentage points, potentially offsetting the benefit from higher revenue forecasts.
He also warned that concerns over the US economic outlook and a potentially higher interest-rate environment could continue to negatively impact valuations. Despite these concerns, CGS raised its FY2026 to FY2028 revenue forecasts by 7.2 to 9.3% and raised its FY2026 earnings per share (EPS) forecast by 4%, citing improved demand recovery.
They also identified potential rerating catalysts, such as new product launches by customers and more revenue opportunities as companies shift production from China to Malaysia. However, they warned of several downside risks, including supply chain disruptions and a weaker global economic outlook, which might reduce customer orders.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
