Aztech Global - CGS-CIMB Research 2021-10-15: Commendable Execution In 3Q21

AZTECH GLOBAL LTD. (SGX:8AZ) | SGinvestors.io AZTECH GLOBAL LTD. (SGX:8AZ)

Aztech Global - Commendable Execution In 3Q21

  • Constrained by component shortages, Aztech's 3Q21 revenue was below expectations at 22.5%/21.7% of our/Bloomberg consensus full-year forecast.
  • Aztech's 3Q21 core net profit was slightly below expectations at 23.8% of our/ Bloomberg consensus full-year forecast.
  • Reiterate ADD. Our target price for Aztech is lowered as we adjust our FY21F-23F revenue expectations due to the ongoing component shortages.



Respectable performance in the face of component shortages

  • Aztech (SGX:8AZ)’s 3Q21 revenue grew 6% y-o-y to S$141.1m while net profit grew 2.9% y-o-y to S$18.0m. Net profit margin fell to 12.8% in 3Q21 vs 13.1% in 3Q20.
  • For 9M21, revenue grew 49% y-o-y to S$390.7m while net profit grew 55.4% y-o-y to S$47.4m. 9M21 net profit margin was 12.1% vs 11.6% in 9M20.
  • On a sequential basis, Aztech's net profit margin improved to 12.8% in 3Q21 from 12.1% in 2Q21 and 11.4% in 1Q21. The improvement in net profit margin was due higher productivity, continuing exit from lower-margin products and tax incentives for its China operations. Its Internet of Things (IoT) and data communication products segment revenue surged 70% y-o-y to S$368.1m in 9M21 and was the key revenue contributor to 9M21 revenue at 94.2%.


Component shortages the key issue

  • Component availability remains the key downside with its full workforce in Malaysia by the third week of Oct.


Reiterate ADD rating for Aztech supported by 23% FY22F EPS growth






William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-10-15
SGX Stock Analyst Report ADD MAINTAIN ADD 1.75 DOWN 1.820



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