iWOW Technology - UOB Kay Hian 2022-04-18: Set To Benefit From Exponential IoT Growth


iWOW Technology - Set To Benefit From Exponential IoT Growth

  • iWOW Technology is a prime beneficiary of the 19% 5-year CAGR in global IoT in the smart cities market. Structural growth is underway given iWOW Technology’s strong foothold in Singapore and its foray into key growth markets. Additionally, iWOW Technology is set to benefit from positive operating leverage as the top-line expands.
  • At the S$0.25 listing price, iWOW Technology trades at an annualised 1HFY22 P/E of 20.2x.

Solid track record of > 20 years with proven ability to create products that are part of prevailng electronics.

  • iWOW Technology (SGX:NXR) had come a long way before venturing into the high-growth IoT space in 2012. Its long operating history has proven its ability to adapt to new market trends within the fast-changing wireless communications industry. Over the years, iWOW Technology has become a trusted IoT solutions provider for Singapore government agencies and B2B customers such as SingTel (SGX:Z74), Mapletree and 3M.

Riding on fast-growing IoT wave.

  • iWOW Technology is well-positioned to tap the global IoT market, with the APAC presenting the fastest growth with a five-year CAGR of 11.7% from 2020-24, according to market research firm MarketsandMarkets. Specifically, global IoT in the smart cities market is projected to grow at a CAGR of 19% from 2021-26, with APAC leading the growth worldwide. Singapore and Japan are two of the largest contributors powering the growth.
  • Smart utility meters have emerged as the top IoT device in relieving rising energy demand, with APAC leading smart meter installations till 2025. We believe structural growth is underway given iWOW Technology’s strong foothold in Singapore and its foray into Japan, Thailand, Malaysia, Indonesia and UAE.

Integrated IoT solutions and R&D are key strengths.

  • We believe iWOW Technology’s robust patients on home recovery.
  • iWOW Technology is also developing other existing IoT offerings such as Alarm Alert System and Electronic Monitoring System solutions to capitalise on the robust tailwinds propelling the IoT industry

Not a COVID play, strong orderbook provides revenue visibility.

  • While iWOW Technology has benefitted from the adoption of TraceTogether tokens, the orderbook of S$67.4m suggests 80% of future revenue will come from Electronic Monitoring System, while just 17% are derived from TraceTogether tokens.

Valued at an annualised 1HFY22 P/E of 20.1x.

  • iWOW Technology's listing price of S$0.25 translates to an annualisted 1HFY22 P/E of 20.1x. This compares to peers which trade at an average 25.0x forward P/E.
  • Re-rating catalysts include a strong earnings profile, potential new customer wins and more accretive M&As.

Expanding its business via investments, M&As and strategic collaborations.

Singapore Research Team UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-04-18
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