ISDN Holdings - Impacted By China’s COVID-19 Lockdown
- ISDN (SGX:I07)'s 1Q22 revenue (S$94.7m, -3.8% y-o-y) and net profit attributable to shareholders (S$6.4m, +5.8% y-o-y) were 10% below our expectations. The revenue miss was due to the COVID-19 lockdown measures in China. The y-o-y decline was softened by better revenue performance (no disclosure provided) in other geographies that ISDN operates in. Gross profit margin remained healthy at 28.7% in 1Q22 versus 27.1% in 1Q21. Cash as at end Mar-2022 was S$70.1m.
- According to management, ISDN continues to see solid demand for industrial automation across its customer base, resulting in a strong current order book (no disclosure provided).
- ISDN is concerned about the global economic outlook, negative impact from the Russia-Ukraine conflict and rising inflation. Management guided that the company remains vigilant in managing its cost base in the face of such concerns.
- Given the 10% revenue miss in 1Q22 and the spread of China’s COVID-19 lockdowns in 2Q22F, we have cut our FY22F revenue forecasts for ISDN by 8.7%. We also err on the side of caution and cut FY23-24F revenue forecasts for ISDN by 6.2-7.4% given the rising economic uncertainties. Our FY22-24F EPS forecasts for ISDN are hence reduced by 11.0-13.4%.
- We reiterate our ADD call on ISDN but lower our target price to S$0.70.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
William TNG CFA CGS-CIMB Research | https://www.cgs-cimb.com 2022-06-14 2022-06-14
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