Stock earnings preview: Venture 1st quarter result by Macquarie!

Electronics contract manufacture Venture Corp is expected to report tomorrow first quarter net profit of 50-51 mln sgd, up from 44.80 mln sgd a year ago, with net margins likely to have improved further, analysts said. However the net earnings estimates are weaker than the 54.80 mln sgd profit achieved by Venture in the fourth quarter of 2005 as the first quarter is typically a weaker one for demand. Daiwa Institute of Research analyst Pranab Kumar Sarmah said he expects Venture to have posted net profit of 51 mln sgd on sales of 730 mln sgd. "The net margin would have improved to 7.1 pct in the first quarter from 6.3 pct in the fourth as contributions from the high volume low margin printer/storage business will have been lower due to the seasonal factor," Pranab said. ABN-AMRO Securities and Macquarie Equity Research both expect Venture to post first quarter net profit of 50 mln sgd, with Macquarie expecting sales of 846 mln sgd for the quarter. Macquarie said Venture's diversification efforts should have shown more traction in the quarter with the possibility of increased contributions from the automotive, medical electronics and test and measurement segments. These segments acounted for 17 pct of Venture's revenues in the fourth quarter of last year. But Venture's fortunes are still heavily dependent on key customer Hewlett-Packard. "Key customer HP's strong operating momentum bodes well for Venture in 2006. In sharp contrast with the trends being reported by other printer firms, HP's print unit saw 8 pct year-on-year growth in revenue last quarter with its operating margin at 14.9 pct," Macquarie said.