MAINBOARD-LISTED Aztech Global : 8AZ -1.18% on Monday (Nov 14) said its wholly-owned Malaysia subsidiary IOT Manufacturing will acquire another manufacturing facility in Johor for RM66.8 million (S$20 million).

 

This will expand the group&rsquo s manufacturing capacity for Internet of Things (IoT) devices and data-communication products in Malaysia to meet demand from existing and potential new customers, it said in a bourse filing.

 

The 300,000 square feet facility at Pasir Gudang is on a land area of about 9.11 acres and is closely located to the group&rsquo s facility at Setia Business Park in Johor. Operations are expected to commence in the second quarter of 2023.

 

The acquisition will be funded via the company&rsquo s initial public offering (IPO) proceeds and bank borrowings. It raised S$198.4 million of gross proceeds during its IPO in March 2021. 

 

The sum of RM66.8 million was arrived at after arm&rsquo s length negotiations and on a willing buyer, willing seller basis.

 

It took into account the group&rsquo s strategic considerations, prevailing market conditions and the market value of the property based on the valuation report, among other factors.

 

The group added that it has &ldquo significantly strengthened its balance sheet and manufacturing capabilities since its successful transformation in 2018&rdquo .

 

Michael Mun, chairman and chief executive officer of Aztech Global, said the acquisition of the facility in Pasir Gudang will support the group&rsquo s expanded design and manufacturing capabilities to meet existing customer needs and capture new growth opportunities.

MAINBOARD-listed Aztech Global : 8AZ -0.61%&rsquo s nine-month net profit rose 34.2 per cent year on year to S$63.7 million, following strong revenue contributions from the group&rsquo s Internet of Things (IoT) devices and data communication products.

 

Earnings per share (EPS) for the January to September 2022 period stood at S$0.0825, up from S$0.0646 previously. 

 

Revenue grew 55.4 per cent to S$607 million, up from S$390.7 million previously. Revenue growth from IoT devices and data communication products were aided by the efficient coordination of components availability, execution and delivery of customer orders at the group&rsquo s manufacturing facilities in Dongguan and Johor, the tech products manufacturer noted in a bourse filing on Thursday (Nov 3).

 

The group&rsquo s order book &ldquo remains healthy&rdquo at S$783.3 million as at Sep 30, 2022. It has since received additional orders of S$37.2 million as of Nov 3, 2022 &ndash bringing its total order book to S$820.5 million, of which $210.0 million is planned for completion in FY 2022, the group said.

 

The board of the company declared an interim dividend of S$0.03 per share for 9M 2022, amounting to S$23.2 million or 36.4 per cent payout from the group&rsquo s earnings for 9M 2022.

 

The group said that increasing recessionary risk, softening demand for consumer electronics products, inflationary cost pressures, and susceptibility of the electronics supply chain to Covid-19 restrictions are expected to weigh on the operating landscape of the electronics and semiconductor industries.

 

&ldquo We will continue to stay vigilant and nimble to manage the myriad of headwinds ahead,&rdquo Mun noted.

Mainboard-listed Aztech Global has reported net profit of $13.9 million for the 1QFY2022 ended March, up 5.3% from net profit of $13.2 million in the same period the year before.

 

Earnings per share (EPS) for the quarter, however, fell 10.9% y-o-y to 1.79 cents, due to the higher base of 771.95 million ordinary shares in the 1QFY2022, compared to the 653.16 million shares in the 1QFY2021.

 

1QFY2022 revenue grew by 10.4% y-o-y to $128.0 million.

 

According to the group, the &ldquo resilient performance&rdquo was thanks to its strength in internet of things (IoT) devices and data-communication products, despite a six-day stop-work order by the Dongguan government in China to prevent the further spread of Covid-19.

 

During the quarter, revenue from IoT devices and data-communication products increased by 16.4% y-o-y to $123.7 million, which accounted for 96.6% of the group&rsquo s total revenue.

 

&ldquo IoT devices and data-communications products have continued to be the group&rsquo s key growth drivers amidst strong production volume and shipment of IoT and data-communication products to customers,&rdquo reads the statement released by Aztech Global on April 18.

 

LED lighting products contributed to the balance with a revenue of $4.3 million for the 1QFY2022.

 

The higher revenue was partly offset by inflationary cost pressures that led to margin compression of 60 to 110 basis points for the group&rsquo s 1QFY2022 EBITDA, pre-tax profit and net profit.

 

EBITDA during the quarter grew by 2.2% y-o-y to $18.3 million, while profit before tax increased 4.6% y-o-y at $15.9 million.

As at end-March, the group&rsquo s cash and bank balances stood at $298.6 million. Net cash for the period stood at $289.3 million.

 

As at March 31, Aztech Global&rsquo s orderbook stood at $677.4 million with additional orders of $35.6 million as at April 18.

 

Most of the orders secured to date are scheduled to be completed in FY2022.

 

In its outlook statement, Aztech says it will continue its three-pronged approach to &ldquo manage component tightness&rdquo as the electronics supply chain and the group&rsquo s operations remain vulnerable to new Covid-19 outbreaks in China.

 

It adds that it is committed to its five focuses of growing new IoT customers and products, deepening its manufacturing and IoT expertise, optimising factors of production and output, integrating sustainability into its business model and strategy, and continuing with its disciplined balance sheet and cost management to fortify its business resiliency.

 

With the measures set out, Aztech says it expects its business to benefit from the global demand for IoT devices, data communication products and smart lighting solutions, as well as its strong order book secured.

 

Aztech Global&rsquo s chairman and CEO Michael Mun says, &ldquo We will continue to be vigilant and will respond to challenges in a measured manner, focusing on building our business fundamentals that will position us well to capture growth opportunities moving forward.&rdquo

 

AZTECH Global Aztech Gbl: 8AZ -2.66% , the technology unit of Aztech Group, on Tuesday (Feb 22) posted a 33.5 per cent increase in net profit to S$74.4 million for the full year ended Dec 31, 2021.

 

While the global supply chain remains vulnerable to disruptions amid the ongoing pandemic, Aztech Global is looking to drive growth and diversify across multi-sectors powered by the Internet of Things (IoT) trend, it said in its financial statement.

 

Despite the tough operating environment posed by the global logistical and component challenges, revenue for the fourth quarter rose 65.3 per cent quarter-on-quarter and 5.2 per cent year-on-year to S$233.7 million.

 

IoT devices and data-communication products were the key growth drivers with the segment advancing 39.5 per cent to S$597 million, accounting for 95.6 per cent of total revenue.

 

Earnings per share for the period was 10 Singapore cents, up from 9.01 cents the year before.

 

The group' s net asset value per share for FY2021 came in at 38 cents as at Dec 31, 2021 versus the 6.73 cents the year before.

 

The board has recommended a final dividend of S$0.05 a share for FY2021, subject to shareholders' approval. A final dividend of S$0.02 was declared for for FY2020.

 

The Q4 revenue growth and initiative to phase out labour-intensive products had also led to a 48 per cent quarter-on-quarter increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) to S$33.9 million while the full-year Ebitda grew 25.6 per cent to S$95.8 million.

 

Meanwhile, Aztech Global said, the preferential tax treatment at its operations in Dongguan, China and tax grant received for automation equipment had resulted in a 370 basis point reduction in effective tax rate to 12.5 per cent for FY2021 and lifted net profit margin by 40 basis points to 11.9 per cent.

 

The group' s cash and bank balances stood at S$201.5 million while total borrowings more than halved to S$14.7 million. Including the net proceeds of the S$188.6 million raised from its initial public offering exercise in March last year and after deducting net cash dividend payment, the group' s net cash came in at S$186.8 million as at Dec 31, 2021.

 

The group' s order book at end-2021 was S$495.8 million. It has since secured additional orders of S$266.2 million as at Feb 22, taking its order book to S$762 million for FY2022.

UOB Kay Hian (UOBKH) has added Aztech Global Aztech Gbl: 8AZ +1.78% and Thai Beverage (ThaiBev) ThaiBev: Y92 0% shares to its alpha picks for the month of February, and removed ComfortDelGro ComfortDelGro: C52 +2.21% and Uni-Asia Group Uni-Asia Grp: CHJ 0%.

 

In a strategy note on Thursday (Feb 3), the brokerage said that Aztech was added with a target price of S$1.55 as its share price correction presented a good buying opportunity due to its strong order book and intact operations.

 

Analyst John Cheong finds the company' s current trading price unjustified, as it is trading at 7 times its price-to-earnings ratio, compared to its peers trading at above 10 times.

 

Shares of Aztech rose S$0.015 or 1.8 per cent to close at S$0.86 on Thursday.

 

The lighting manufacturing company' s recent buyback of 1.9 million shares, which account for 0.2 per cent of its total shares, is seen as a " vote of confidence" , Cheong said.

 

He also predicted " robust" Q4 FY2021 results for the company, as it serves as a proxy to the high-growth sector of Internet of Things products, where orders were just starting to ramp up in 2021 and would sustain into 2022.

 

Meanwhile, analyst Llelleythan Tan added ThaiBev with a target price of S$0.92, expecting the beverage company to benefit from Thailand' s tourism revival and boost to consumption with the relaxation of alcohol consumption rules.

 

ThaiBev' s strong December and November 2021 sales numbers could also positively impact its upcoming Q1 FY2022 earnings, he observed.

 

Tan also noted that the potential initial public offering of ThaiBev' s beer subsidiary may unlock value for the group in the first half of FY2022, " conservatively" valuing the beer business at around US$5 billion using 13 times its Ebitda (earnings before interest, taxes, depreciation and amortisation), which is lower than its peers.

 

ThaiBev shares closed flat at S$0.655 on Thursday.

 

The brokerage has dropped ComfortDelGro and Uni-Asia from its February alpha picks as they do not see any near-term share price catalysts for both counters. However, it is bullish towards ComfortDelGro in the longer term.

 

UOBKH' s alpha picks performed poorly in January against the Straits Times Index (STI), declining 1.8 per cent month on month versus a 4 per cent rise in the STI.

 

The portfolio was " hurt by real estate investment trusts (Reits) and small caps" , although the brokerage remains bullish on selective Reit sub-sectors and has not changed its stock calls. Frasers Logistics and Commercial Trust Frasers L& C Tr: BUOU +1.46% was the main underperformer, dropping 9.9 per cent month on month.