Compiled by Lynette Khoo, The Business Times
VENTURE CORPORATION | BUY
TARGET PRICE: $21.00
OCT 6 CLOSE: $18.45
DBS Group Research, Oct 6
In the recent quarter, Venture Corp announced a historical-high quarterly performance. The company has demonstrated consistent revenue growth (on a year-on-year basis) for the last 15 quarters.
With earnings growth trajectory gaining momentum over the last five quarters due to its exposure in attractive end-markets such as genome sequencing and networking and communications, we believe that the strong growth momentum is likely to continue amid its chief executive officer's share purchases in the open market since July.
We maintain our "buy" call with a revised target price of $21.00, as we believe the earnings growth prospects and potential dividend upside are attractive attributes.
We currently have the highest target price on the street. We remain positive on Venture's growth trajectory and believe the market has yet to fully price in the company's growth potential given its unique offerings, superior technology know-how and hard-to-replicate ecosystems.
We raised our target price to $21.00 on higher earnings estimates and better margin expectations, pegged to a PE multiple of 20 times FY18/19 earnings, attributing a 5 per cent premium on top of the average forward PE for high-mix low-volume electronic manufacturing services peers of 18.5 times.
KEPPEL CORPORATION | BUY
TARGET PRICE: $7.36
OCT 6 CLOSE: $6.68
OCBC Investment Research, Oct 6
Keppel Corp yesterday announced that Keppel Shipyard has secured a floating production storage and offloading (FPSO) conversion contract from long-standing customer SBM Offshore.
The Tina very large crude carrier will be converted to an FPSO.
It will have a storage capacity of 1.6 million barrels of crude oil and is able to produce up to 120,000 barrels of oil a day.
Keppel's work scope includes refurbishment and life extension works as well as the installation and integration of topside modules, and we estimate a contract value of more than $100 million for Keppel.
We maintain "buy" with $7.36 fair value estimate on Keppel Corp.
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