CGS International Securities April 16, 2025
Aztech Global Ltd: 1Q25 Off to a Dismal Start
Aztech Global Ltd, a tech manufacturing services company, has reported a dismal start to its fiscal year 2025 (FY25) with revenue and net profit forming just 8% and 3% of its full-year forecasts, respectively. The company’s performance was marred by reduced demand from its customers, leading to a significant miss in its revenue and net profit forecasts.
Financial Performance
The company’s revenue for 1Q25 came in at S$42 million, down 67.3% year-over-year (yoy) and 49.6% quarter-over-quarter (qoQ). Its net profit was S$1.5 million, down 85.1% qoQ and 91% yoy. This significant decline in revenue and profit was primarily due to a sharp decrease in orders from customers.
Key Changes and Financials
Revenue Growth: -67.3% yoy
Net Profit: -90.6% qoQ
EBITDA Margin: 9.8% vs. 16.7% in the previous quarter
Net Profit Margin: 3.6% vs. 12.4% in the previous quarter
The company’s five new customers secured in 1Q25 will not be sufficient to arrest the revenue decline, according to CGS International Securities. With the escalation of the US-China trade war, the revenue outlook could be weak over FY25-27F.
Earnings Revisions and Forecasts
CGS International Securities has reduced its revenue forecasts for Aztech Global Ltd by 41.6-42.9%, leading to a 33.6-60.8% reduction in its EPS forecasts. The company’s target price has been revised to S$0.41 from S$0.67.
Valuation and Recommendation
The valuation basis is unchanged at its 4-year average P/E of 8.4x on lowered FY26F EPS forecast, pushing down the target price to S$0.41.
Rating Distribution: Add: 71.0%, Hold: 20.9%, Reduce: 8.2%
Investment Banking Clients: 0.7% (1.3%)
ESG and Risk Factors
Aztech’s manufacturing operations are subject to environmental risks and hazards, and the company is responsible for ensuring product safety, safe workplace conditions, and proper waste disposal. Failure to comply with laws and regulations in its market of operations may result in fines, penalties, and revocation of permits.
Financial Summary
Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F
Revenue (S$m) 896.3 621.6 312.6 351.4
Net Profit (S$m) 100.0 70.5 20.7 37.9
Normalised EPS (S$) 0.13 0.09 Представитель0.09 0.03 0.05
Gross Profit Margin 22.00% 22.00% 22.00% 22.00 …… 22.00%
P/E (x) 27.2 14.9 …
Peer Comparison
Company Ticker Price Market Cap P/E (x) Recurring
Aztech Global Ltd AZTECH SP 0.73 428 27.2 14.9%
Benchmark Electronics BHE US 35.23 NA 1,287 14.7
Venture Corporation VMS SP 10.84 2,369 14.2 12.9%
Financials
Dec-23A Dec-24A Dec-2025F Dec-2026F Dec-20227F
Total Net Revenues (S$m) 547.578 602.161 632.269 312.628 351.446
Gross Profit 211.9 141.6 79.1 88.6
Operating EBITDA 126.1 81.7 28.3 51.1
Depreciation And Amortisation (8.7) (9.3) (10.3) (11.3)
Balance Sheet
Dec-23A Dec-24A Dec-2025F Dec-2026F s$ Dec-27F
Total Cash And Equivalents 231.4 292.1 302.7 320.2
Total Debtors 200.7 81.8 77.1 86.7
Inventories 73.9 32.4 25.6 28.8
Short-term Debt 3.5 3.4) (0.6) 0.0 0.002
Cash Flow From Investing -6.2 29.1 (7.3) (8.9)
Key Ratios
Revenue Growth: 9.3% (30.6%) (49.7%) 12.4% 5.0%
Operating EBITDA Growth: 42.9% (35.2%) (65.4%) 80.6% 11.5%
Operating EBITDA Margin: 14.1% 13.1% 9.0% 14.5% 15.4%
Net Cash Per Share (S$): 0.28 0.36 0.37 0.40 0.43
Trends and Implications
Aztech’s energy and water consumption is mainly for its office, manufacturing operations, and motor vehicles. Aztech recognizes that the efficient use of resources is essential for sustained economic growth and is committed to integrating environmental values into its operations.
The company has secured five new customers from the consumer, health-tech, and industrial segments during 1Q25, with commercial production scheduled to start from 2H25F.
Implications of ESG
Aztech’s manufacturing operations are subject to environmental risks and hazards.
Failure to comply with laws and regulations in its market of operations may result in fines, penalties, and revocation of permits.
Conclusion
The company has downgraded its call on Aztech from Hold to Reduce, given the uncertain EPS outlook and the potential risks associated with its key customer and volatile foreign exchange rate movements.
Aztech presently has a production facility in Dongguan City, Changping town that is leased from the Guangdong provincial government in China; however, it has not obtained the necessary certificates and permits from the state government, which may disrupt production.
Recommendations
Add: The stock’s total return is expected to exceed 10% over the next 12 months.
Hold: The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.
Reduce: The stock’s total return is expected to fall below 0% or more over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price of S$0.41 and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.
Company Information
Market Cap: US$428.0m S$563.4m**
Average Daily Turnover: US$0.75m S$1.00m**
Current Shares Outstanding: 772.0m
Free Float: 29.7%
Major Shareholders
Azventure Investments Ltd: 70.2%
HSBC Holdings: 1.2%
Financial Data
| Dec-23A | Dec-24A | Dec-2025F | Dec-26F | Dec-27F | | :——————————- | :—— | :—— | :—— | :—— | :—— | | Revenue Growth | 9.3% | (30.6%) | (49.7%) | 12.4% | 5.0 … ….
Price Performance
| Absolute (%) | -4.0% | 1.3% 6.6 | -26.3 | **6.6 … |
CGS International Securities has a proprietary position in the securities (which may include but not be limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report and may from time to time add to or dispose of, or may be materially interested in, any such securities.
The analyst(s) who prepared this report certifies that the views expressed herein accurately and exclusively reflect his or her personal views and opinions about any and all of the issuers or securities analysed in this report and were prepared independently and autonomously.
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