Venture Corp

[AlphaQuant]

Anyone has any views? I am not too comfortable of just looking at margins and conclude competition is killing venture, is there anyway to know Venture major customers for each segment? Are they growing when venture is dwindling?

I did some research on Venture a long while back, so let me summarise my thoughts.

Globalisation has a massive effect on the industry - and there's a very good reason why the term "supply-chain" came up. Basically suppliers are now part of a chain with globalisation of labor+cheapening of freight. In the past suppliers manufacture and ship whatever they please, retailers stock and then sell; now retailers with Just-In-Time systems demand suppliers to cope with whatever spikes and troughs in the retail demand. It's cheap to do the actual manufacturing and the value now resides in the creation (aka Apple) and the retail churn.

Venture does not compete in the sweatshop category (e.g. Foxconn etc) - it tries to move up the valuechain by doing research/bespoke/niche stuff - which is reflected in their NPM of 7-8% in the mid 2000s and the 5-6% in the post 2010s.

So is this NPM good enough? Well i think all it reflects is the reality of the market - sweatshops get 1-2%, guys like Venture used to get 7-8% and now 5-6% and retailers like Challenger get 5-6% for the whole electronic/electrical industry. Unless the RMB strengths by 30% and the SGD stops appreciating 15% in 5 yrs, you prob see the cost structure of the industry remaining this way. If you don't like it, then the simple thing to do is to choose another industry and not another company within the same industry.

Venture does not have one particular client, i believe. If you read their AR segmental results, i think there's just one bloke with >10% of revenues (I think this is HP or its spinoff Agilent).