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Aztech Global - Maybank Research 2022-04-19: Resilient Demand Backdrop; 1Q22 PATMI Met Lower-end Of Estimates

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

Aztech Global - Resilient Demand Backdrop; 1Q22 PATMI Met Lower-end Of Estimates

  • Aztech (SGX:8AZ)'s 1Q22 PATMI of S$13.9m (+5% y-o-y) formed 16%/15% of our/consensus’ full-year estimates. This met the lower-end of our expectation (1H:2H seasonality is typically 40:60), and should have been firmly in line if not for the temporary Dongguan factory closure in March.
  • Our FY22E PATMI forecast for Aztech is unchanged as we raise revenue forecasts on the back of strong order book, but cut margin assumptions due to the inflationary environment. As such, we maintain BUY rating on Aztech.



Temporary factory closure clips 1Q22 performance

  • Revenue rose 10.4% y-o-y to S$128m, driven by IoT and datacom (+16%; 97% of total). But inflationary costs eroded net margin by 0.5ppt y-o-y to 10.8%.
  • Dongguan manufacturing operations were disrupted from 15-20 Mar to facilitate COVID-19 testing, and full operations resumed on 21 Mar.


Strong demand outlook

  • Aztech's order book of S$713m, largely for FY22E delivery, remains strong. Rather than raising our FY22E revenue forecast at ~S$840m (i.e. 1Q21 revenue + current order book), our estimate is S$797m to account for potential slippage of delivery times given still vulnerable supply chain conditions in China (~80% of production capacity), due to the COVID-19 outbreak there.


Taking a more conservative view on FY23E






Gene Lih Lai CFA Maybank Research | https://www.maybank-ke.com.sg/ 2022-04-19
SGX Stock Analyst Report BUY MAINTAIN BUY 1.130 SAME 1.130



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