LEARNING SERIES: PROFIT FROM RED FLAGS – #7 – CASE STUDY Venture Corp Ltd

As mentioned in the previous article, we would be looking at a case study to help us better understand the concept of Red Flags. While searching through the stocks in Singapore, I have noticed that Venture Corp Ltd had declined drastically over past few months and I have decided to look into this company in more detail.

 

Disclaimer: Please note that this post is solely for learning purposes and it is not a buy/sell call to the stock.

 

Review: Red Flag #1 – Revenue vs Receivables:

 

Except for FY2016 where there is a 25% increase in Receivables, other years looks reasonable. The risk is low as revenue have increased by 39% in Mar 2018 where receivables only increased further by 7%.

 

Year ended Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
FY2013 FY2014 FY2015 FY2016 FY2017 LTM Q1’18
Revenue         2,330         2,465         2,657         2,874         4,005         3,957
% Increase in Revenue 6% 8% 8% 39%
Account Receivables            520            557            570            713            766            750
% Increase in Receivables 7% 2% 25% 7%

 

Review: Red Flag #2 – Cost of Sales more than Revenue:

No red flag seen. Company is making good profit margins

 

Year ended Mar 2014 Mar 2015 Mar 2016 Mar 2thir Mar 2018
FY2013 FY2014 FY2015 FY2016 FY2017 LTM Q1’18
Revenue         2,330         2,465         2,657         2,874         4,005         3,957
COGS         1,793         1,894         2,041         2,172         3,039         2,907

 

Review: Red Flag #3 – Major part of the Profit is Non Cash

 

No red flag seen. Positive cashflow from operations is seen consistently.

 

Year ended Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018
FY2013 FY2014 FY2015 FY2016 FY2017 LTM Q1’18
Revenue         2,330         2,465         2,657         2,874         4,005         3,957
% Increase in Revenue 6% 8% 8% 39%
Cashflow From Operations            106            168            234            231            449            472
% Increase in CF from Ops 58% 39% -1% 94%

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Do visit our Stock Analysis Tool to look at how we look at the fundamentals of Venture Corp.  https://www.investwhizz.com/stock/?stockcode=V03

 

InvestWhizz’s Score = 61.54% (Visit the above link to find out how this is calculated for Free)

 

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