ISDN Holdings Limited: 2025 Interim Financial Analysis

ISDN Holdings Limited, a leading provider of industrial automation and renewable energy solutions across Asia, reported its unaudited financial results for the six months ended June 30, 2025. The group demonstrated robust revenue growth across all key segments and regions, despite currency headwinds and notable non-cash forex losses tied to its renewable energy business.

Key Financial Metrics

Performance Trends and Segment Analysis

• Revenue: Strong expansion across all segments and geographies. Industrial automation contributed 84.7% of revenue (+6.4% YoY), with China and Southeast Asia driving growth. China revenue grew 3.7% YoY (9.7% at constant currency), outperforming China’s GDP growth. Southeast Asia saw a 15.1% YoY increase, with Malaysia, Thailand, and Taiwan showing particularly rapid growth.
• Renewable Energy: Segment revenue surged from \$5m to \$32.5m, mainly due to construction revenue recognition for two new hydropower stations. Operating hydropower stations continue to provide high-margin, stable income.
• Profitability: Core profit (excluding non-cash forex losses) increased 35.1% YoY, but reported net profit fell 66.0% due to a \$5m non-cash forex loss from long-term receivables/payables in the renewable energy segment. Gross margin fell to 23.7%, largely due to low-margin construction revenue.
• Dividend: No interim dividend proposed, consistent with the previous year. The Board cites economic uncertainty and a desire to retain capital for growth.

Exceptional and One-Off Items

• Forex Losses: A \$5m non-cash, unrealized forex loss impacted reported profit, arising from revaluation of long-term receivables and payables in the renewable energy business.
• Inventory Provisions: Additional provisions were made for aged inventory held for more than 3-4 years.
• Asset Revaluation: There were no delays or inconsistencies in asset revaluation disclosed.

Corporate Actions and Related Events

• Acquisitions: Several investments and acquisitions were made, including increased stakes in subsidiaries and a new joint venture (IDI Dynamics).
• No Share Buybacks or Dilution: No buybacks, sales, or new share issues in H1 2025. No treasury shares held as of June 30, 2025.
• Fundraising and Capital Management: The company maintains a prudent capital policy, with healthy liquidity (cash and equivalents at \$56.1m) and gearing at 34.9%.
• No Significant Legal, Regulatory, or Macroeconomic Events: No material legal disputes, disasters, or regulatory changes reported. The macro environment is described as uncertain, but not disruptive.

Chairman’s Statement

“2025年上半年，億仕登取得了令人矚目的強勁業績，這充分彰顯了我們在過去 24 個月市場低迷期內，始終秉承紀律性原則並堅持進行戰略性投資所帶來的持續成效。

我們持續提升在工業自動化領域的能力，而億仕登在中國這一最大市場的成長，正好驗證了此領域在中國未來發展中的重要性。我們亦已積極投資開拓馬來西亞、泰國及臺灣地區等新市場。我們很高興見到投資已初見成效，並將繼續致力於拓展新興細分市場。在整個亞洲，我們的核心業務正經曆持續穩步的週期性復蘇。同時，我們也通過地域擴展與能力提升，不斷擴大市場份額，建設培育超額增長動能，以期在經濟週期與國内生產總值成長之上，持續推動更快的業績成長。

我們的可再生能源業務仍在穩步推進。目前，三座小型水電站的收入占總收入的 2.5%，毛利潤占比為 9.8%。還有兩座電站計畫於 2026 年投運，屆時總裝機容量將增加 81.3%，達到 44.6 兆瓦。預計這將對我們的利潤增長產生更為顯著的貢獻，並進一步提升本集團的長期業務韌性。”

The tone is constructive and optimistic, emphasizing strategic discipline and investment, strong performance in core markets, and a positive outlook for both industrial automation and renewable energy businesses.

Remuneration, Related-Party Transactions & Other Items

• Directors’ Pay: Administrative expenses declined slightly, partly due to reduced executive director performance bonuses.
• Related-Party Transactions: The report discloses regular operational transactions with related parties; no abnormal or material related-party transactions were flagged.

Liquidity, Capital Structure & Risk

• Liquidity: Cash and equivalents remain strong at \$56.1m. Quick ratio is 1.3x, down from 1.6x at year-end.
• Debt: Total bank loans stand at \$70.6m. Weighted average interest rate is 4.5%, down from 4.8% at year-end.
• Risk: The group remains exposed to currency risk (mainly RMB and USD), but has not entered into hedging arrangements.

Outlook & Forecasted Events

• ISDN expects continued growth in Asian industrial automation, supported by government and private sector investment in manufacturing and robotics, especially in China. Southeast Asia and Taiwan remain key expansion markets.
• Renewable energy will become a more significant profit contributor as two new hydropower plants come online in 2026, expanding total installed capacity by over 80%.
• Despite economic uncertainty, the group is maintaining investment discipline and a focus on sustainable growth.

Conclusion and Investment Recommendations

Overall, ISDN Holdings delivered strong top-line growth and core profit expansion, with all major segments and geographies contributing positively. Reported net profit was heavily impacted by non-cash forex losses, but these are not expected to affect long-term profitability. The company maintains a solid liquidity position, prudent leverage, and continues to invest in long-term growth drivers.

For Current Shareholders: Consider holding your position. The company’s fundamentals remain sound, and the completion of new hydropower stations in 2026 should significantly improve profit contributions, especially as core operating profits are rising. Currency-related volatility in reported profit should be monitored, but is not expected to threaten long-term value.

For Prospective Investors: ISDN offers attractive growth exposure to Asian industrial automation and renewable energy. Entry at current levels may be favorable for long-term investors, but be aware of short-term earnings volatility due to currency movements and the absence of interim dividends as the company prioritizes capital retention for growth.

Disclaimer: This analysis is based solely on published financial statements and does not constitute investment advice. Investors should consider their own risk tolerance and conduct further due diligence before making investment decisions. Past performance is not indicative of future results.

View ISDN Historical chart here