InnoTek Limited FY2025 Financial Results: Analysis and Outlook

InnoTek Limited, a precision manufacturing group listed in Singapore, has released its unaudited condensed interim financial statements for the six and twelve months ended 31 December 2025. The results reflect the challenging macroeconomic and industry conditions faced during the year, including global supply chain realignments, trade tensions, and sector-specific headwinds.

Key Financial Metrics

Historical Performance Trends

InnoTek’s FY2025 performance reflects significant declines in both revenue and profitability compared to FY2024. Revenue fell 11.8% YoY, with net profit plunging by 71.7% and EPS declining by 65.3%. The group’s gross profit margin also dropped from 15.3% to 13.6%. These declines were broad-based across the company’s main segments, impacted by weaker demand from the office automation, automotive, and TV/display sectors, as well as adverse effects from trade tariffs and softer export markets. The GPU server segment was a bright spot, recording growth in a difficult environment.

Exceptional Earnings and Expenses

• Disposal of Subsidiary: The group completed the disposal of its 70% stake in Hua Yuan Sheng Industrial Company Limited (Vietnam) in October 2025, resulting in a S\$270,000 loss, which was recorded in other expenses.
• Impairments: No new impairment losses were charged on property, plant, and equipment or right-of-use assets during FY2025, in contrast to the prior year where impairments were recognized.
• Interest Income and FX: Interest income declined 46.7% YoY due to lower prevailing rates. The group also swung to a foreign exchange loss of S\$258,000 from a gain of S\$1.08 million year-on-year.

Dividends

The Board has proposed a final one-tier tax exempt dividend of 2.0 cents per share for FY2025, unchanged from the previous year.

Share Buybacks, Dilution, and Corporate Actions

• During FY2025, the company repurchased 1,526,000 shares, increasing its treasury shares to 13.38 million. 3.5 million treasury shares were utilized for the Employee Share Option Plan (ESOP).
• 2.6 million share options remained outstanding as of year-end, down from 6.7 million a year earlier due to exercises and cancellations.
• The company incorporated new subsidiaries in China and Malaysia and increased the share capital of its Thai and Malaysian subsidiaries, funded internally.

Related-Party Transactions and Unusual Fund Flows

Significant related-party transactions included payments and sales involving entities in which the CEO has indirect interests. The company did not obtain a shareholders’ IPT mandate for these transactions. Lease liabilities include S\$1.2 million relating to a lease with a company partially owned by a director.

Major Events and Business Developments

• Divestment: Completed the sale of its Vietnamese subsidiary, with the rationale to redeploy resources toward higher-growth manufacturing activities.
• Capex and Expansion: Construction began on a major new factory extension in Thailand, set to quadruple capacity. This reflects confidence in long-term growth, especially in GPU server components for AI and data centers.
• Product Portfolio: The group is expanding into advanced GPU server chassis, liquid-cooling systems, and other AI-related server products.

Chairman’s Statement

“During the year under review, the manufacturing sector remained challenging amid supply chain realignments, tariff-related disruptions, and cautious customer spending. Against this backdrop, the Group recorded moderately softer performance in certain traditional segments, particularly office automation (“OA”) and TV/Display, offset by the strong growth in the GPU server segment.
Despite near-term uncertainties, the Group remains confident in the long-term growth prospects of its GPU server business, amid rising demand for artificial intelligence (“AI”), data centres, and high-performance computing. In October 2025, the Group announced that it had been approved as a recommended vendor for NVIDIA Corporation and IEIT Systems Co., Ltd, strengthening its reputation as a reliable precision machining and precision metal components manufacturer for the AI industry.
Mass production for components commenced in December 2025, with manufacturing volume expected to increase in FY2026 alongside demand. Building upon this foundation, the Group has been proactively delivering prototypes to NVIDIA to support future server models, and is also in active discussions with other customers for similar GPU server-related projects.
The Group has continued to expand its product portfolio, including advanced GPU server chassis, liquid-cooling systems, and AI-related server products aimed at enhancing performance and energy efficiency.
To meet anticipated demand, the Group is investing in new manufacturing capabilities and capacity. The Group has begun construction of a new 15,772 sqm factory extension, adjacent to its current facility in Rayong, Thailand. Expected to be completed in 2Q’26, this latest addition is expected to more than quadruple the Thai facility’s built-in area.
In October 2025, the Group successfully completed the disposal of its 70 percent-owned subsidiary, Hua Yuan Sheng Industrial Co., Ltd. (Vietnam). This disposal allows the Group to sharpen its strategic focus and redeploy resources towards higher-growth and higher-value manufacturing activities.
For the automotive segment, China’s accelerated transition to electric vehicles has intensified competition and pricing pressures; however, it has also accelerated customers’ export production relocation plans. In response, the Group is expanding its Thailand operations and realigning its product offerings to better support global Tier-1 customers.
Meanwhile, the Group is working closely with its OA customers to support their production relocation strategies and maintain operational stability. The TV/Display segment also faced headwinds as customers adjusted capacity in response to softer demand in the United States and Europe.
Building upon its strengthened business foundation and focus on AI-related products, the Group is cautiously optimistic that financial performance will improve in FY’26 compared to FY’25. It will continue to monitor geopolitical developments closely, particularly U.S.–China trade relations, while maintaining prudent cost management, to support sustainable growth and long-term competitiveness.”

Tone: The statement is cautiously optimistic. While acknowledging industry challenges, the Chairman highlights strategic moves into AI-related manufacturing and capacity expansion, suggesting expectation of improved performance in FY2026.

Conclusion and Investment Recommendation

Overall, InnoTek’s FY2025 results show a weak financial performance, with broad-based declines in revenue, profit, and margins. The group’s balance sheet remains robust with significant net cash, and management is taking proactive steps to pivot towards growth markets in AI and GPU server manufacturing. The proposed dividend is maintained, reflecting confidence in cash flow stability. The outlook for FY2026 is cautiously optimistic due to strategic positioning in high-growth segments and new manufacturing capacity coming online.

If You Currently Hold the Stock

Investors holding InnoTek shares may consider maintaining their position, especially if seeking exposure to the emerging AI and data center manufacturing value chain. The company’s strong net cash, disciplined capital management, and capacity expansion support a potential medium-term recovery. However, monitor quarterly results for confirmation of the anticipated turnaround in 2026.

If You Do Not Hold the Stock

Potential investors may wish to wait for evidence of earnings recovery and margin improvement in upcoming quarters before initiating a position. While the strategic shift towards AI-related manufacturing is positive, the near-term earnings outlook remains uncertain given the recent sharp profit declines and sectoral headwinds.

Disclaimer: This analysis is based strictly on data provided in InnoTek Limited’s FY2025 financial statement. It does not constitute investment advice. Investors should consider their own risk tolerance and consult with a licensed financial professional prior to making investment decisions.

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