Aztech Global - CGS-CIMB Research 2022-07-26: Order Momentum Remains Strong

Aztech Global - Order Momentum Remains Strong

  • Aztech (SGX:8AZ)’s 1H22 revenue and net profit of S$364.6m and S$42.9m (+46.0% y-o-y and +45.7% y-o-y) was above ours and Bloomberg consensus expectations (Aztech has a 40:60 seasonality). The strong growth was mainly driven by its IoT and data communication segment which delivered 52.6% y-o-y revenue growth to S$354.9m (97.3% of 1H22 revenue).
  • Net profit margin was flat y-o-y at 11.8% in 1H22. 2Q22 net profit margin was 12.3% versus 12.1% in 2Q21 and 10.8% in 1Q22. Net profit margin benefited from
    • strong demand for its IoT and data communication products which offer higher margins,
    • better operating cost controls and
    • unrealised foreign exchange gains offset by a higher tax rate as tax incentives for its China operations were fully utilised.
  • Order book as at 25 Jul 22 was S$827.0m, of which S$450.0m is targeted to be delivered in FY22F. Aztech has secured the key components to fulfill this S$450.0m order.
  • Our key takeaways post earnings call with Aztech's management are
    1. Customer A accounted for ~80% of Aztech's 1H22 revenue versus ~65% of revenue in 1H21,
    2. demand for Customer A’s smart security cameras continues to be strong,
    3. component shortages situation has improved,
    4. COVID-19 situation (especially in China), supply chain-related risks and cost pressures will continue to be headwinds in 2H22F.
  • Management is optimistic about the demand for IoT devices and data communication products, and will continue to focus on operational excellence to manage the uncertain environment.
  • Given the revenue outperformance driven by continued strong orders from its key customer, we revise our FY22-24F revenue forecasts for Aztech upwards by 4.9%, leading to a 5.2-7.2% increase in our FY22-24F EPS forecasts.
  • Target price for Aztech is raised to S$1.22 (previously S$1.16) based on an unchanged average forward P/E of 9.1x from Mar 2021 to Jun 2022.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

William TNG CFA CGS-CIMB Research | 2022-07-26
SGX Stock Analyst Report ADD MAINTAIN ADD 1.22 UP 1.160

Previous report by CGS-CIMB:
2022-07-18 Aztech - Anticipating Margin Pressure

Target prices by 2 other brokers at Aztech Target Prices.
Listing of broker reports at Aztech Analyst Report.

Relevant links:
Aztech Share Price History,
Aztech Announcements,
Aztech Dividends & Corp Actions,
Aztech News Articles


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