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ISDN Holdings Ltd: Riding China’s Automation Wave and Renewable Energy Expansion

Investment Summary: Buy Recommendation with Attractive Upside Potential

• Stock: ISDN Holdings Ltd (ISDN SP)
• Recommendation: BUY
• Entry Price: 0.40
• Target Price: 0.44
• Stop Loss: 0.38

ISDN Holdings Ltd is an established engineering company with a global footprint, specializing in motion control, industrial computing, and a suite of related engineering services. The company is well-positioned to benefit from China’s strategic push into advanced manufacturing and continues to build resilience through diversification into renewable energy.

Strategic Positioning: Capitalizing on China’s Manufacturing Modernization

ISDN stands at the forefront of China’s ambitious plan to modernize its electronic information manufacturing sector. The country aims for a robust 7% annual industrial output growth, with a sharp focus on upgrading semiconductors, communications equipment, and advanced electronics.

• ISDN’s core pillars—motion control, precision manufacturing, system solutions, and software integration—are perfectly aligned with China’s drive to digitalize and enhance industrial production.
• The government’s commitment to strengthening international competitiveness opens up new growth avenues for ISDN, especially as manufacturers demand smarter, greener, and higher-precision solutions.
• ISDN’s full-stack automation capabilities make it a preferred partner for electronics, EV, solar, and advanced manufacturing sectors across China and beyond.

Diversified Growth Engines: Industrial Automation Meets Renewable Energy

ISDN’s business model is powered by two robust engines—Industrial Automation (IA) and Renewable Energy (RE):

• Industrial Automation (IA): Accounts for nearly 85% of group revenue, driven by resilient demand in China and expanding market share in Southeast Asia. The China+1 strategy is fueling growth as companies diversify their supply chains.
• Renewable Energy (RE): Contributes 15.3% of revenue, supported by three operational hydropower plants that generate stable, recurring income. Two additional plants are currently under construction, promising further growth in this segment.

This balanced approach not only provides cyclical growth but also enhances financial stability through steady income streams from renewable energy operations.

Financial Performance: Resilience Amid Currency Volatility

Despite adverse foreign exchange movements, ISDN delivered strong underlying results in the first half of 2025:

• Revenue: Up 22% year-on-year to S\$212.9 million
• Gross Profit: Increased 13.8% year-on-year to S\$50.5 million
• Core Earnings: Grew 35.1% year-on-year, excluding S\$5 million in unrealized FX revaluation losses
• Segment Highlights:
  • China IA business expanded 3.7% year-on-year, demonstrating resilience despite currency headwinds
  • Southeast Asia IA surged 15.1%, driven by market share gains amid supply chain diversification
  • Renewable Energy contributed 15.3% of total group revenue, reflecting the segment’s growing importance

ISDN’s ability to deliver sustainable growth despite macroeconomic volatility underscores its solid fundamentals and positions the company for further upside as FX effects normalize.

1H25 Financial Highlights: Key Metrics Table

Key Investment Takeaways

• Robust Fundamentals: ISDN combines cyclical industrial automation growth with steady renewable energy income, providing financial resilience and diversification.
• Market Leadership: The company’s full-stack automation solutions align with China’s modernization drive, positioning it to capture rising demand across multiple high-growth sectors.
• Resilient Performance: Despite FX headwinds, ISDN’s core earnings remain strong, underscoring operational efficiency and strategic execution.
• Renewable Energy Expansion: Additional hydropower plants under construction will further boost recurring income and long-term stability.

Conclusion: ISDN Holdings Offers Strong Upside Amid Sector Tailwinds

ISDN Holdings Ltd stands out as a compelling investment opportunity, leveraging its strength in automation and renewables to ride the wave of China’s advanced manufacturing aspirations. With balanced growth drivers, resilient financials, and a clear strategic roadmap, ISDN is well-positioned for sustained value creation—making it a top pick for investors seeking exposure to industrial automation and green energy trends.