Aztech Global (SGX:8AZ)'s 1Q23 revenue increased by 26.3% y-o-y to $161.6m, mainly driven by strong IoT device and Data-communication product sales, which contributed 97.8% to the total revenue. Net profit of S$13.4m was down 3.6% y-o-y.
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Weaker margins on inflationary pressure and forex loss.
Net profit margin eased to 8.3% in 1Q23, vs 10.8% in 1Q22. This was mainly due to higher operating expenses resulting from inflationary cost pressures and a forex loss of S$3.1m.
Gross profit margin was also weaker compared to a year ago. Though margins for 1Q tend to be weaker, we do not expect margins to revert to 2022 levels amidst the on-going inflationary pressure.
Healthy orderbook as of end-March 2023
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Majority of the $661.9m orders secured to date is scheduled for completion in FY23. However, this pales in comparison to the orders secured as of 17 February 2023 of S$718.6m. This could be partly due to the shorter lead time for orders on the back of the supply chain recovery.
The order lead time is now shorter, at about 6-9 months, (vs. 9-12 months previously). The still weak demand for consumer electronics could also affect the orderbook, though we expect a gradual recovery from 2H23.
On the positive front, with the shorter order lead time, we can look forward to more contracts being secured.
New plant in Johor on track to commence in June 2023.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
