SINGAPORE (May 11): Following a 33.6% y-o-y drop in net profits for 1Q20  due to global supply chain disruption, most analysts have recommended that investors to “hold” shares in Venture Corporation despite the stock’s long-term growth prospects. 

“Venture’s 1Q20 was affected by the lockdown measures due to COVID-19… Net margins fell to 9%, the weakest quarter in the last two years,” says DBS analyst Ling Lee Keng, who cut earnings forecasts for FY20 and FY21 by 12% and 7% respectively owing to the weaker quarter. “The disruptions to the global supply chain in China, Malaysia and Singapore, and factory lockdowns in China, Spain, the US and Malaysia, mainly impacted the second half of 1Q 2020.” 

DBS Group Research and RHB have therefore downgraded Venture from “buy” to “hold” or “neutral”. RHB has lowered its target price to $15.10 from $16.60 with a 4% downside, while DBS has raised its target price from $15.80 to $15.90, albeit with a more modest 1% upside. 

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