Aztech's earnings softened on a y-o-y basis, but 2QFY25 saw strong sequential recovery as order momentum improved.
Recovery takes shape
Aztech reported 1HFY25 revenue and net profit of S$185.4mil and S$16.1mil, falling 50.3% and 65.5% y-o-y respectively amid subdued customer demand.
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Stable gross margin; 2QFY25 net margin saw a sharp improvement q-o-q on operating leverage.
1HFY25 gross margin held up at 23.9% vs 22.9% in the previous year, due to cost discipline, although forex losses from a weaker US$ weighed on other income.
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The US remains the largest revenue contributor at 68.8%, though down from 83.6% y-o-y amid slower demand. Europe’s share rose to 25.0% (from 12.5% y-o-y), suggesting improved customer diversification.
1HFY25 above expectations.
Overall, 1HFY25 revenue accounted for 75% and 82% of our full-year forecast, vs 60%/66% in 1HFY24, above expectations.
An interim DPU of 1.00 cents, translating to a 48% payout of 1H profits, was declared. See Aztech's dividends payout date.
Strong rebound in 2QFY25 suggests order momentum improving, but recovery remains fragile. We believe the 2Q rebound offers early signs of stabilisation, but the recovery remains fragile and contingent on execution.
The strong q-o-q rebound in 2Q suggests that customer activity is returning.
Customer diversification strategy has gained traction.
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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/.
