Introduction
The UOB Kay Hian research report provides a detailed review of Aztech Global’s most recent performance, along with a broad peer comparison of listed companies from both the Singapore and Malaysian markets. This comprehensive article dives deep into key financial figures, strategic initiatives, valuation metrics, and catalysts that could shape the future of these companies. The analysis is designed to help financial market participants gain a clearer understanding of each entity’s position in a competitive landscape, with focus on dividend policies, revenue trends, and overall operating performance based solely on the published PDF.
Aztech Global: Company Overview and Performance
Company Background and Transformation
Aztech Global, an established electronics manufacturer with 34 years of market experience, has successfully evolved from an Original Equipment Manufacturer (OEM) into a full-fledged manufacturer. The company’s robust track record is underpinned by its continuous adaptation to evolving trends and expansion into broader manufacturing capabilities.
2024 Earnings and Revenue Performance
In 2024, Aztech Global reported net earnings of S\$71 million – a 30% year-on-year decline – which only marginally missed the market expectations by 2%. The decline was primarily driven by a 31% decrease in revenue, largely attributed to lower sales volume in IoT devices and data-communication products amid softer customer demand. These results were further weighed down by increased depreciation expenses while partly being offset by higher net interest income, favorable fair value gains on foreign exchange contracts, and lower tax expenses. The company’s reported final and special dividend of 10 S cents per share (complemented by an interim dividend of 5 S cents) boosted the total ordinary dividend declared to 15 S cents per share, an 88% increase year-on-year. However, this has resulted in a payout ratio of 164%.
Operational Initiatives and Strategic Moves
Operationally, Aztech Global has consolidated its manufacturing processes by centralizing operations at its 300,000 square foot facility in Pasir Gudang, Johor, Malaysia. With the installation of new plastic injection machines and the upcoming commissioning of an automated production line in 2Q25, the company is reinforcing its production capacity. Concurrently, the Group has rationalized its capacity at its Dongguan, China facility, ensuring a leaner operation. Moreover, the firm registered S\$81 million in revenue for 4Q24 from an orderbook that, as of the last provided update, stands at roughly S\$61 million after adjusting for previous year’s figures.
Outlook and Recommendation
Despite the robust dividend yield and cost management efforts, market uncertainties and the impact of diminished revenue have prompted UOB Kay Hian to lower the revenue forecasts by 26%/25% for FY2025/2026, with a corresponding reduction in net profit estimates. The strategic measures and order wins offer some upside potential, yet the short-term outlook remains uncertain. Consequently, the recommendation remains at a HOLD, with a target price of S\$0.65—a 28% downside from the current share price—anchored on a 9x 2025 earnings per share (EPS) multiple.
Key Financials and Valuation
The report lays out a detailed set of financial metrics covering net turnover, EBITDA, operating profit, and net margins across the periods up to 2027. Highlights include:
- Net Turnover: 2024 revenue hit S\$621.6 million, with a forecast decline to S\$527.4 million in 2025 and a modest recovery to S\$580.8 million by 2027.
- Profitability Metrics: EBITDA, operating profit, and net profit have followed a similar contraction, with results slightly underperforming expectations in 2024.
- EPS and Valuation Ratios: EPS stood at 9.1 S cents in 2024, with an anticipated decline in subsequent years. Valuation multiples such as P/E, P/B, and EV/EBITDA are in line with the company’s high dividend payout and its long-term historical range.
- Dividend Yield and Payout: The dividend yield is exceptionally high at 20.7% for 2024, reflecting the total dividend hurdles set by the significant payout ratio.
- Balance Sheet Considerations: The company maintains a robust cash position with rationalized working capital changes, despite oscillations in net debt ratios.
Operational and Stock Impact Catalysts
Aztech Global’s strategic consolidation efforts and ongoing operational enhancements are expected to have a material impact on its stock performance. Key catalysts include:
- Successful consolidation of manufacturing operations in Malaysia leading to additional capacity through automation.
- The rationalization of capacity in China, optimizing operating efficiency.
- Steady order wins and a focus on expanding its customer base via new products and potential M&A opportunities.
- Better-than-expected forex gains and ongoing cost management initiatives.
- A substantial dividend payout that offers an attractive yield for income-focused investors.
Peer Comparison Analysis
The report also provides a comprehensive comparison among various Singapore and Malaysian listed peers, highlighting key valuation and performance metrics that inform investor decisions.
Singapore Peers
- AEM: Trading at S\$1.49 with a market cap of S\$348 million, AEM displays a high 2024 P/E of 47.4, which moderates to 19.0 in 2025. The company’s P/B ratio is 1.0, paired with an EV/EBITDA multiple of 0.9 and a dividend yield around 5.1%.
- Frencken: With a share price of S\$1.08 and a market cap of S\$344 million, Frencken’s 2024 and 2025 P/E ratios stand at 12.5 and 11.6 respectively. The P/B ratio is 1.1, EV/EBITDA is 1.0, and the dividend yield is an appealing 9.0% with a ROE of 5.9%.
- Fu Yu: Trading at S\$0.104 with a smaller market cap of S\$59 million, Fu Yu does not have available data for the key valuation metrics, indicating either a nascent stage or limited coverage available in the report.
- UMS: Priced at S\$1.08 with a robust market cap of S\$573 million, UMS features a 2024 P/E of 18.6, decreasing to 17.1 in 2025. Its P/B ratio is 1.9, while EV/EBITDA clocks in at 1.8. A healthy dividend yield of 10.7% complements its ROE of 9.6%.
- Valuetronics: At a share price of S\$0.66 and market cap of S\$202 million, Valuetronics reports a 2024 P/E of 9.3 and a slight dip to 8.7 in 2025. The company’s P/B ratio is 1.1 and EV/EBITDA sits at 1.0 with a dividend yield of 12.1% and ROE of 1.8%.
- Venture Corp: Leading the pack with a share price of S\$12.63 and a market cap of S\$2,725 million, Venture Corp is valued at a 14.9 P/E in 2024 and 14.7 in 2025. The P/B ratio of 1.3 with an EV/EBITDA multiple of 1.2, a ROE of 8.1%, and a dividend yield of 8.6% makes it a key competitor in the region.
Malaysian Peers
- V.S. Industry: With a price of S\$0.975 and market cap of S\$854 million, V.S. Industry trades with a 2024 P/E of 15.2, which increases to 16.8 in 2025. Its P/B ratio is 1.6, EV/EBITDA is 1.6, and the company offers a dividend yield of 9.8% alongside a robust ROE of 8.9%.
- ATA IMS: Trading at S\$0.29 and a market cap of S\$79 million, ATA IMS currently has unavailable (n.a.) data for key ratios, suggesting limited reported financial metrics.
- Skp Resources: With a share price at S\$1.00 and a market cap of S\$353 million, Skp Resources posts a 2024 P/E of 12.8, which narrows to 10.6 in 2025. The P/B ratio stands at 1.6, EV/EBITDA is 1.5, and it provides an attractive dividend yield of 14.7% paired with a ROE of 6.2%.
Aztech Global Peer Metrics
Within the peer comparison table, Aztech Global itself is listed with a share price of S\$0.725 and a market cap of S\$418 million. Its 2024 P/E is 7.8, marginally decreasing to 7.5 in 2025, while the P/B ratio is 1.6 and EV/EBITDA is 1.5. Furthermore, the company boasts a strong ROE of 20.7% and a dividend yield of 12.4%, which positions it as an appealing growth option within a volatile demand environment.
Long-Term Forward PE Considerations
The valuation of these companies is further benchmarked against a long-term forward PE band where Aztech Global’s target of 9x 2025F EPS sits at 0.5 standard deviations above its historical mean. This positioning, alongside the high dividend payout ratio and forward-looking market performance, reflects the market’s cautious yet opportunistic approach, particularly given the broader economic and geopolitical uncertainties.
Conclusion
The detailed UOB Kay Hian report outlines the mixed performance of Aztech Global amidst falling revenue and a challenging operating environment in 2024. While the company has taken significant steps to consolidate its operations, improve capacity, and secure new commercial production lines, the forecast uncertainties have led to a revised revenue and profit outlook. Consequently, the recommendation remains a HOLD with a target price of S\$0.65. The comprehensive peer comparison further provides investors clarity on where Aztech stands relative to top regional players, spotlighting attractive dividend yields, valuation multiples, and operational strategies that could serve as catalysts for future recovery.
This in-depth analysis serves as an essential reference for market participants seeking a nuanced understanding of Aztech Global and its regional peers as reported by UOB Kay Hian on 26 February 2025.
