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27-04-2015, 04:29 PM
Venture Corp: Downgrade to HOLD on valuation grounds
The World Semiconductor Trade Statistics (WSTS) reported that the world semiconductor market grew 9.9% to US$336b in 2014, mainly driven by 18.2% growth in memory product category as annual sales increased across all geographical regions. WSTS goes on to forecast steady but moderate growth of 4.9% to US$352b and 3.1% to US$363b in 2015 and 2016, respectively, for all product categories and regions. . In the longer-term, IDC forecasts a CAGR of 3.1% from 2014 to 2019, reaching US$389b in 2019. On these data, we have reasons to believe the industry outlook remains positive over the next few years on moderate growth projections. As we think VMS has more room to grow in its TMO segment, our current assumptions forecast for 10.2% and 9.2% growth in FY15 and FY16 PATMI, respectively. Consequently, our FV remains unchanged at S$8.41. But given that the share price has increased steadily to S$8.53, we downgrade VMS to HOLD on valuation grounds. (Eugene Chua)
The World Semiconductor Trade Statistics (WSTS) reported that the world semiconductor market grew 9.9% to US$336b in 2014, mainly driven by 18.2% growth in memory product category as annual sales increased across all geographical regions. WSTS goes on to forecast steady but moderate growth of 4.9% to US$352b and 3.1% to US$363b in 2015 and 2016, respectively, for all product categories and regions. . In the longer-term, IDC forecasts a CAGR of 3.1% from 2014 to 2019, reaching US$389b in 2019. On these data, we have reasons to believe the industry outlook remains positive over the next few years on moderate growth projections. As we think VMS has more room to grow in its TMO segment, our current assumptions forecast for 10.2% and 9.2% growth in FY15 and FY16 PATMI, respectively. Consequently, our FV remains unchanged at S$8.41. But given that the share price has increased steadily to S$8.53, we downgrade VMS to HOLD on valuation grounds. (Eugene Chua)