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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