ISDN Holdings - CGS-CIMB Research 2023-01-13: Assuming Anggoci COD (Commercial Operation Date)

ISDN Holdings - Assuming Anggoci COD (Commercial Operation Date)

ISDN HOLDINGS LIMITED (SGX:I07) | SGinvestors.ioISDN HOLDINGS LIMITED (SGX:I07)
  • ISDN (SGX:I07) provided an update on its mini hydropower business via a virtual investor meeting on Friday, 13 Jan 2023. Proforma net profit impact from its LB1 plant was shared and ISDN is optimistic that its other two plants could achieve COD soon.
  • We assume Anggoci will obtain COD by end-1Q23F and factor in its net profit contributions for FY23-24F, leading to a higher S$0.61 target price. Maintain Add.
  • ISDN shared during the investors briefing that the Lau Biang 1 (LB1) mini hydropower plant is located at the Lau Biang river in North Sumatra, which enjoys significant rainfall and has a sustainable energy demand from the local community. ISDN also shared that on a proforma basis, LB1 would have contributed S$2.0m to its 9M22 profit after tax and minority interest, in line with our expectations.
  • ISDN currently has two other hydropower plants in North Sumatra, Indonesia, namely Anggoci (10MW capacity) and Sisira (4.6MW capacity), which were successfully commissioned in Sep 2021. Management guided that they are hopeful these two plants will finally achieve commercial operation date (COD) soon (possibly by 1Q23F, in our view).
  • ISDN also guided that it has in total 164MW worth of hydropower concessions (including LB1, Anggoci and Sisira). There are plans to continue building up the mini hydropower business with planned LB2-LB6 plants in the coming years.
  • Management also guided that ISDN would be mindful of improving shareholders’ returns via options such as
    1. raising dividend payout as cash flow improves with the COD of the power plants;
    2. selling the power plants if it benefits shareholders; and
    3. potentially list the mini hydropower plants business.
  • As Sisira is a show case and learning project for ISDN, we think the net profit contribution from this plant is low. However, the Anggoci plant which is also 10MW capacity could have a similar net profit potential as LB1.
  • We assume that Anggoci can achieve COD by end-1Q23F and contribute to ISDN’s FY23-24F net profits. This leads to 1.2-2.3% increases in our FY23-24F revenue forecasts and 8.2-11.7% increases in our net profit forecasts for ISDN. Given the EPS increases, our target price for ISDN rises to S$0.61, based on an unchanged 8.9x P/E multiple (5-year average).




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 | Izabella TAN CGS-CIMB Research | https://www.cgs-cimb.com 2023-01-13



Previous report by CGS-CIMB:
2023-01-04 ISDN Holdings - First 10MW Hydropower Plant Obtains Commercial Operation Date.

Price targets by other brokers at ISDN Target Prices.
Listing of research reports at ISDN Analyst Reports.

Relevant links:
ISDN Share Price History,
ISDN Announcements,
ISDN Dividends & Corporate Actions,
ISDN News Articles















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