Aztech Global - DBS Research 2023-05-05: Orderbook Healthy Despite Weaker Margins

Aztech Global - Orderbook Healthy Despite Weaker Margins

Aztech (SGX:8AZ) | SGinvestors.ioAztech (SGX:8AZ)
  • 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 the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Lee Keng LING DBS Group Research | 2023-05-05

Read also DBS's most recent report:
2023-10-17 Aztech Global - Strong 3Q23; Stable Orderbook & Margins.

Price targets by 2 other brokers at Aztech Target Prices.

Listing of research reports at Aztech Analyst Reports.

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


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