ISDN Holdings Ltd: A Promising Recovery in Motion Control and Industrial Automation

ISDN Holdings Ltd (ISDN), a leading player in the motion control and industrial automation (IA) sectors, is set to resume earnings growth over FY25-26F after a challenging FY23. With a target price (TP) of S\$0.35, the company has been upgraded from “Hold” to “Add” as its core EPS is expected to grow by 12.0-43.1% year-on-year (yoy) during this period.

FY24 Financial Performance and Outlook

ISDN’s FY24 net profit is projected to jump by 60.4% yoy, reaching S\$7.9 million. This recovery is attributed to stabilizing demand in cyclical industries and a rebound in the IA segment in China, which remains key to the company’s growth strategy. The management’s focus on expanding its footprint in Malaysia and Taiwan further strengthens its revenue diversification efforts.

Strategic Partnerships

On November 1, 2024, ISDN subsidiary Servo Dynamics secured exclusive distribution rights for Dafang’s AI-driven construction robots in Singapore and Malaysia. These advanced solutions, approved by the Housing and Development Board (HDB), promise to cut labor costs by 50-80% and material waste by 15-50%, significantly enhancing construction efficiency.

Growth Drivers and Risks

ISDN’s hydropower projects in Indonesia and China’s economic re-stimulation efforts are expected to act as key re-rating catalysts. However, downside risks include global economic slowdowns, weak customer demand, and potential bad debts.

Key Financial Metrics

• Revenue (FY24F): S\$350.3 million (+2.5% yoy)
• Net Profit (FY24F): S\$7.94 million
• FD Core P/E (FY24F): 17.12x
• Dividend Yield (FY24F): 1.46%

Frencken Group Ltd: A Solid “Add” Recommendation

Frencken Group Ltd, a diversified technology solutions provider, has been rated “Add” with a target price of S\$1.38. The firm exhibits strong fundamentals and is well-positioned for growth despite global economic uncertainties.

Valuation and Financial Metrics

• Current Price: S\$1.10
• Target Price: S\$1.38
• Market Cap: US\$347 million
• P/E (CY25F): 11.1x
• P/E (CY26F): 9.0x
• Recurring ROE (CY25F): 9.5%
• Dividend Yield (CY25F): 2.7%

With its diversified product portfolio and strong market presence, Frencken Group is set to capitalize on global demand recovery, making it a sound investment choice.

Nanofilm Technologies Int’l Ltd: A “Reduce” Rating Amid Challenges

Nanofilm Technologies Int’l Ltd, despite its innovative material science solutions, faces headwinds that warrant a “Reduce” rating with a target price of S\$0.63.

Valuation and Financial Metrics

• Current Price: S\$0.70
• Target Price: S\$0.63
• Market Cap: US\$334 million
• P/E (CY25F): 21.6x
• P/E (CY26F): 16.2x
• Recurring ROE (CY25F): 5.3%
• Dividend Yield (CY25F): 1.2%

The company’s high valuation multiples and slower growth trajectory make it less attractive compared to peers. Challenges in scaling its business and maintaining competitive margins add to the cautious outlook.

Venture Corporation: Resilient Growth with Strong Returns

Venture Corporation, a leading provider of technology services and solutions, is rated “Add” with a target price of S\$15.30. The company continues to exhibit robust growth backed by its diversified customer base and innovative solutions.

Valuation and Financial Metrics

• Current Price: S\$12.95
• Target Price: S\$15.30
• Market Cap: US\$2,764 million
• P/E (CY25F): 13.4x
• P/E (CY26F): 12.6x
• Recurring ROE (CY25F): 9.7%
• Dividend Yield (CY25F): 5.8%

With stable recurring revenues and a strong balance sheet, Venture Corporation remains a top pick for long-term investors seeking steady returns.