Maybank Kim Eng is keeping its “hold” recommendation on Venture Corporation, the provider of technology services, products and solutions, with an unchanged target price of $18.46.

However, the research house prefers Frencken Group in the tech services space, due to its more attractive valuations and higher probability for earnings resilience. It has a “buy” call on Frencken with a target price of $1.33.

In a Sept 29 report, analyst Gene Lih Lai says, “Venture is exposed to governance (eg. conflict of interest and customer confidentiality), labour and environmental risks through its business in the electronics manufacturing supply chain.”

However, Venture has policies to manage key governance risks that include corruption, conflicts of interest and customer confidentiality. In 2019, it had: zero public cases regarding corruption/ termination of business relationships due to corruption; and zero incidents of breach of customer privacy and loss of customer data.

Moreover, the group has a robust track record of service excellence, and has been frequently recognised as a preferred supplier by many customers.

On the other hand, Venture faces risks of worker exploitation by third-party suppliers as it relies on a significant number of migrant workers. Hence it has put processes in place, such as conducting audits with its recruitment service providers to ensure recruitment complies with all local regulations.

The group is also exposed to risks of conflict minerals in its supply chains. Its anti-conflict mineral policy includes mandating suppliers fulfil due diligence to ensure minerals are not sourced from conflict areas.

Meanwhile, the group believes that in order to be “future ready”, sustainability is core in driving long-term economic growth.

Currently, Venture’s environmental exposure is mainly through power, water and materials. Its manufacturing sites are ISO 14001 Environment Management System certified, and it has committees to ensure each site’s compliance with laws and regulations. Venture also complies with the Restriction of Hazardous Substances (RoHS) directive, and uses RoHS-certified equipment.

In 2019, there were no significant fines or nonmonetary sanctions related to environmental laws.

As at 12.30pm, shares in Venture are trading at $19.42 or about 2.2 times FY20 book with a dividend yield of 3.9%.