UOB Kay Hian April 16, 2025
Aztech Global Ltd: Downgrade to SELL on Challenging Outlook
Aztech Global Ltd, a 34-year-old electronics manufacturer, has been downgraded to SELL by UOB Kay Hian, with a target price of S$0.46, representing a 37% downside from the current share price of S$0.73.
Company Description and Stock Data
Aztech Global Ltd is an electronics manufacturer with a proven track record in adapting to evolving trends and transforming from an OEM into a full-fledged manufacturer. The company’s stock data includes:
GICS sector: Information Technology
Bloomberg ticker: AZTECH SP
Shares issued: 771.8m
Market cap: S$563.4m (US$428.0m)
3-month average daily turnover: US$0.8m
52-week high/low: S$1.08/S$0.67
1Q25 Results Below Expectations
Aztech Global’s 1Q25 earnings of S$1.5m (-91% yoy) are significantly below expectations, forming only 3% of UOB Kay Hian’s full-year estimate. Revenue fell 67% yoy due to reduced customer demand. The company’s net cash position was healthy at S$316m (S$0.40/share) as of 1Q25, while its net asset value stood at S$0.44/share.
Financial Highlights
Revenue: S$42.0m (1Q25), S$128.6m (1Q24), -67.3% yoy
PBT: S$1.8m (1Q25), S$18.9m (1Q24), -90.5% yoy
Net profit: S$1.5m (1Q25), S$15.9m (1Q24), -90.6% yoy
Net margin: 3.6% (1Q25), 12.4% (1Q24)
Challenging Outlook and Strategy
The global economic climate remains uncertain, with evolving trade wars and geopolitical tensions. Aztech is focusing on:
Strengthening its customer base by enhancing relationships with current customers and securing new ones
Maintaining a diversified and extensive network of suppliers to mitigate tariff-related risks
Leveraging its flexibility to expand manufacturing capacities in Malaysia and China
Adopting a disciplined approach to costs, cash, and capital management
Tightening its foreign exchange risk management policy
Earnings Revision and Valuation
UOB Kay Hian slashes its 2025-27 revenue forecasts by 58-59%, driven by weaker-than-expected results and the global environment fraught with uncertainty. As a result, earnings estimates are revised downward by 61-65% for the same period.
Valuation and Recommendation
UOB Kay Hian downgrades Aztech Global to SELL with a 29% lower target price of S$0.46, pegged to 1.1x 2025F book value. This is based on -2SD to Aztech’s long-term P/B band.
Share Price Catalyst
Steady order wins
Better-than-expected forex gain and cost management
Dividend surprise
Peer Comparison
Company Ticker Market Cap (US$m) PE (x) P/B (x) EV/EBITDA (x) ROE (%) Yield (%)
Aztech Global AZTECH SP 428 7.5 1.5 3.3 20.9 13.0
AEM AEM SP 259 13.9 0.7 8.2 5.9 2.2
Frencken FRKN SP 318 10.5 0.9 4.9 8.9 3.0
Fu Yu FUYU SP 52 n.a. n.a. n.a. n.a. n.a.
UMS UMSH SP 1,540 15.8 1.7 8.8 11.2 4.9
Valuetronics VALUE SP 185 8.1 1.0 1.2 12.2 8.5
Venture Corp VMS SP 2,370 12.6 1.1 6.3 8.8 6.9
Profit & Loss and Balance Sheet
Year to 31 Dec (S$m)
2024 2025F 2026F 2027F
Net turnover 621.6 218.2 228.8 240.0
EBITDA 77.8 26.5 27.7 28.8
Operating profit 68.5 16.5 18.9 21.6
Net profit (rep./act.) 70.5 20.0 22.1 24.3
Cash Flow Key Metrics
Year to 31 Dec (S$m) 2024 2025F 2026F 2027F
Operating 126.8 34.3 31.4 32.0
Pre-tax profit 94.6 23.6 26.1 28.7
Tax (10.0) (13.8) (3.4) (3.8)
Deprec. & amort. 9.3 9.9 8.8 7.2
Important Disclosures
This report is prepared by UOB Kay Hian Private Limited, which is a holder of a capital markets services license and an exempt financial adviser in Singapore. The information or views in this report have been obtained or derived from sources believed to be reliable. However, UOB Kay Hian makes no representation as to the accuracy or completeness of such sources or the Information and UOB Kay Hian accepts no liability whatsoever for any loss or damage arising from the use of or reliance on the Information.
