Overview

This report delves into the financial performance, prospects, and recommendations for Aztech Global Ltd and its competitors, including Frencken Group Ltd, ISDN Holdings Ltd, Nanofilm Technologies International Ltd, and Venture Corporation. Each company is analyzed for its revenue trends, profit margins, and market positioning, offering a holistic view of their potential for investors.

Aztech Global Ltd

Aztech Global Ltd, headquartered in Singapore, faced significant challenges in FY24 due to declining orders from its key customer, which contributed 80% of its revenue for the first nine months of 2024. This customer concentration risk led to a 30.0% year-on-year decline in net profit, estimated at S\$70.0 million for FY24. The slowdown was attributed partly to over-ordering during the COVID-19 pandemic, leaving excess inventory to be digested.

Efforts are underway to reduce customer reliance and diversify revenue streams. Management is pursuing new customer engagements, with a portfolio of 10 new products across communication, consumer, health-tech, and industrial segments. The Pasir Gudang facility, which obtained ISO 13485 certification for manufacturing medical device components, positions Aztech to deepen its footprint in the health-tech sector.

The company’s financial forecast for FY25 predicts a flat net profit of S\$70.8 million, with potential recovery anticipated in FY26, leading to a higher net profit forecast of S\$75.3 million (+6.4% year-on-year). The stock is upgraded to “Add” with a target price of S\$0.82, representing a 19.7% upside from the current price of S\$0.685. Aztech’s prospective 11.7% dividend yield for FY25-26 is expected to support its share price.

Key Risks: Continued dependency on the key customer, order cancellations due to economic slowdown, and volatile exchange rates.

Frencken Group Ltd

Frencken Group Ltd is another player in the tech manufacturing sector, with a market capitalization of US\$350 million. The company’s stock is rated as “Add” with a target price of S\$1.38, offering a potential upside from the current price of S\$1.11.

Frencken’s projected P/E ratios for CY25F and CY26F are 11.1x and 9.0x, respectively. The company is expected to deliver a recurring return on equity (ROE) of 9.5% in CY25F, making it a reliable investment with a dividend yield of 2.7%. Its price-to-book value ratios for CY25F and CY26F are forecasted at 1.02x and 0.94x, respectively, indicating a strong balance sheet.

ISDN Holdings Ltd

ISDN Holdings Ltd, valued at US\$99 million, is focused on industrial automation solutions. The stock is rated as “Add” with a target price of S\$0.35, offering an optimistic outlook from its current price of S\$0.30.

Although no specific earnings or growth forecasts are provided, ISDN’s consistent dividend yield of 2.0% highlights its commitment to returning value to shareholders. The company’s focus on automation and innovation positions it for long-term growth in the industrial sector.

Nanofilm Technologies International Ltd

Nanofilm Technologies International Ltd, with a market capitalization of US\$334 million, has faced challenges in recent years. The stock is rated “Reduce,” with a target price of S\$0.63, lower than its current price of S\$0.70.

The company’s projected P/E ratios for CY25F and CY26F are 21.4x and 16.1x, respectively, reflecting a high valuation relative to peers. Additionally, its recurring ROE of 5.3% in CY25F and a dividend yield of 1.1% indicate limited near-term growth prospects. Despite these challenges, Nanofilm remains a key player in advanced material technologies, with potential for innovation-driven growth.

Venture Corporation

Venture Corporation, the largest among the analyzed companies with a market capitalization of US\$2.73 billion, is rated as “Add” with a target price of S\$15.30, offering a favorable outlook from its current price of S\$12.80.

The company’s projected P/E ratios for CY25F and CY26F are 13.1x and 12.3x, respectively, supported by a recurring ROE of 9.7% for CY25F. Venture Corporation’s dividend yield of 5.9% highlights its strong shareholder return policy.

As a leader in the electronics manufacturing services industry, the company’s broad portfolio and strong customer relationships position it for sustained growth. Its price-to-book value ratios for CY25F and CY26F are forecasted at 1.26x and 1.23x, signaling a robust financial foundation.