Venture Corporation Limited (SGX:V03) Stock's On A Decline: Are Poor Fundamentals The Cause?

editorial-team@simplywallst.com (Simply Wall St)

Wed, May 14, 2025, 11:09 PM 4 min read

With its banal down 13% implicit the past 3 months, it is casual to disregard Venture (SGX:V03). To determine if this inclination could continue, we decided to look astatine its anemic fundamentals arsenic they signifier the semipermanent marketplace trends. In this article, we decided to absorption connected Venture's ROE.

ROE oregon instrumentality connected equity is simply a utile instrumentality to measure however efficaciously a institution tin make returns connected the concern it received from its shareholders. In different words, it is simply a profitability ratio which measures the complaint of instrumentality connected the superior provided by the company's shareholders.

This exertion could regenerate computers: observe the 20 stocks are moving to marque quantum computing a reality.

The formula for ROE is:

Return connected Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based connected the supra formula, the ROE for Venture is:

8.5% = S$246m ÷ S$2.9b (Based connected the trailing 12 months to December 2024).

The 'return' is the yearly profit. One mode to conceptualize this is that for each SGD1 of shareholders' superior it has, the institution made SGD0.08 successful profit.

Check retired our latest investigation for Venture

Thus far, we person learned that ROE measures however efficiently a institution is generating its profits. We present request to measure however overmuch nett the institution reinvests oregon "retains" for aboriginal maturation which past gives america an thought astir the maturation imaginable of the company. Assuming everything other remains unchanged, the higher the ROE and nett retention, the higher the maturation complaint of a institution compared to companies that don't needfully carnivore these characteristics.

At archetypal glance, Venture's ROE doesn't look precise promising. However, its ROE is akin to the manufacture mean of 8.5%, truthful we won't wholly disregard the company. Having said that, Venture's 5 twelvemonth nett income diminution complaint was 4.1%. Remember, the company's ROE is simply a spot debased to statesman with. Hence, this goes immoderate mode successful explaining the shrinking earnings.

Next, connected comparing with the manufacture nett income growth, we recovered that Venture's net seems to beryllium shrinking astatine a akin complaint arsenic the manufacture which shrunk astatine a complaint of a complaint of 4.2% successful the aforesaid period.

The ground for attaching worth to a institution is, to a large extent, tied to its net growth. What investors request to find adjacent is if the expected net growth, oregon the deficiency of it, is already built into the stock price. This past helps them find if the banal is placed for a agleam oregon bleak future. If you're wondering astir Venture's's valuation, cheque retired this gauge of its price-to-earnings ratio, arsenic compared to its industry.