CGS International Securities
July 22, 2025

Aztech Global Ltd: Navigating Recovery as Orders Rebound, Dividend Announced, and Sector Peer Analysis

1H25 Earnings Outperform Expectations Amid Revenue Decline

Aztech Global Ltd, a key player in Singapore’s tech manufacturing services sector, has delivered a mixed bag of results for the first half of 2025. While revenue for 1H25 plunged 50.3% year-on-year to S\$185.4 million and net profit fell 65.5% to S\$16.1 million, both metrics outperformed earlier forecasts. The improvement was particularly notable on a quarter-on-quarter basis:

• 1Q25 to 2Q25 revenue soared 241.4% to S\$143.4 million
• Net profit for 2Q25 jumped 873.3% quarter-on-quarter to S\$14.6 million

For the first half, revenue comprised 59.3% of the full-year forecast (70% of Bloomberg consensus), while net profit reached 77.6% of the full-year estimate (80.4% of Bloomberg consensus). Aztech’s net cash stood at S\$214.5 million as of end-June 2025, with a book value per share of S\$0.35. The company declared an interim dividend of 1.0 Singapore cent (48% payout ratio), payable on August 6, 2025.

Management Outlook: Cautious Optimism and New Orders

Management remains wary of macroeconomic and geopolitical headwinds, emphasizing a need to sharpen the business model and seize emerging opportunities. Year-to-date, Aztech has secured 12 new product orders, spanning innovations such as:

• 3D medical navigation devices
• AI occupancy sensors
• AI-controlled cat flaps
• Smart air purifiers

Additionally, the company added seven new customers, winning projects across consumer, health-tech, industrial, and security sectors. Commercial production starts are slated for the second half of 2025. Aztech also expects to book a S\$4.2 million gain from the sale of its Gelang Patah plant in Johor, Malaysia, in 2H25. Management expects traditional second-half seasonality to persist for FY25.

Upgraded Rating and Target Price Revision

Following a robust 2Q25, CGS International Securities has upgraded Aztech from Reduce to Hold and raised its FY25 revenue forecast by 14.8%. This revision translates to a 64.9% increase in estimated FY25 EPS. The target price is now S\$0.60 (from S\$0.41), based on a 12.2x FY26F P/E, reflecting the 5-year average. Key risks include:

• Order cancellations from economic slowdown
• Volatile foreign exchange impacts
• High dependence on a single key customer (80% of FY24 revenue)

If orders from this customer do not recover, Aztech’s net profits could be significantly impacted.

Key Financial Metrics and Shareholder Information

• Current price: S\$0.605
• Target price: S\$0.60
• Market cap: S\$466.9 million (US\$364.5 million)
• Shares outstanding: 772.0 million
• Free float: 29.7%
• Major shareholder: Azventure Investments Ltd (70.2%)

Peer Comparison: How Aztech Stacks Up

Aztech’s valuation and growth outlook are benchmarked against leading regional and global peers in the electronics manufacturing services sector. Key comparisons include:

Aztech’s P/E multiples are lower than those of some global peers but higher than certain regional counterparts, reflecting its current recovery phase and ongoing risks.

Operational Trends and Cash Position

– 2Q25 revenue recovery led to a significant improvement in net profit margin trends. – Net cash position dipped after dividend payments but remains robust. – Book value per share as of June 2025 is S\$0.35. – Net cash per share is projected to rise from S\$0.28 in 2023 to S\$0.43 by 2027. – Operating EBITDA margin is expected to improve slightly, from 11.8% in 2025 to 12.2% in 2027.

ESG Highlights: Compliance, Resource Efficiency, and Potential Risks

Aztech is committed to upholding global supply chain standards, including inclusiveness, human rights, workplace safety, environmental protection, and ethical practices. The company’s main China factory, located in Dongguan, is leased from the Guangdong provincial government. While Aztech lacks some state-level permits, the lease is secured through March 2028, minimizing near-term risk of disruption. The company phased out its smaller Dongguan facility after expanding production in Malaysia.
Environmental risks remain a key consideration, though Aztech reports no incidents in China from FY17 to FY24. The company is focused on energy and water efficiency, converting air conditioners to inverter systems in Dongguan dormitories and exploring solar energy deployment.

Detailed Financial Statements: Profit & Loss, Cash Flow, and Balance Sheet

Profit & Loss Highlights (S\$ million):

• Gross profit margin: Expected to stabilize at 22% through FY27
• Net profit margin: 6.63% in 2025F, rising to 9.85% in 2027F
• ROE: Declining from 31.8% in 2023 to 10.9% in 2027F

Cash Flow Overview (S$ million):

• Operating cash flow: S\$28.1 million in 2025F, rising to S\$39.3 million in 2027F
• Capex: S\$5.0 million annually from 2025F onward
• Dividends paid: S\$17.1 million in 2025F, rising to S\$21.0 million by 2027F
• Free cash flow to equity: S\$30.1 million in 2025F, S\$41.3 million in 2027F

Balance Sheet Key Figures (S$ million):

• Total cash & equivalents: S\$306.3 million in 2025F, S\$344.1 million in 2027F
• Total debtors: S\$88.5 million in 2025F, S\$105.1 million in 2027F
• Inventories: S\$29.8 million in 2025F, S\$35.5 million in 2027F
• Total liabilities: S\$129.1 million in 2025F, S\$142.0 million in 2027F
• Shareholders’ equity: S\$356.2 million in 2025F, S\$396.1 million in 2027F

Conclusion: Gradual Recovery with Cautious Optimism

Aztech Global Ltd is showing clear signs of a gradual operational recovery, supported by new customer wins, product innovation, and a robust cash position. However, ongoing macroeconomic uncertainties, heavy dependence on a single key customer, and regulatory complexities in China remain notable risks. Investors should monitor order trends, customer diversification, and execution on new product lines as the company navigates a challenging but potentially rewarding recovery path.

Stock Ratings and Investment Framework

• Add: Total return expected to exceed 10% over 12 months
• Hold: Total return expected between 0% and 10%
• Reduce: Total return expected to fall below 0%

Sector and country ratings follow similar market-cap and benchmark-relative frameworks.
Aztech Global Ltd currently stands at a Hold rating, reflecting balanced risk-reward as the company positions itself for future growth amid sector volatility.