Aztech Global reports 79% surge in Q2 net profit as it produces and ships more IoT and communication devices

TECH solutions provider Aztech Global reported a 79 per cent surge in net profit to S$29 million in the second quarter of financial year 2022, thanks to “strong production volume and shipment” of Internet of Things (IoT) and data communication devices, according to the company’s interim financial statement on Monday (Jul 25).

This has brought the net profit to S$42.8 million for the 6 months ended Jun 30, a 45.7 per cent jump compared to the same period last year, despite ongoing challenges posed by the Covid-19 pandemic and supply chain disruptions.

Likewise, revenue in Q2 leapt 77 per cent year on year to S$236.6 million, but saw an 84.8 per cent surge sequentially.

For the first half of the year, the company reported a 46 per cent year-on-year boost in revenue to S$364.6 million.

Explaining the results, Aztech said: “This was aided by the efficient coordination of components availability, execution and delivery of customer orders at its manufacturing facilities in Dongguan and Johor.” It said IoT devices and data communication products continued to be the group’s key growth driver, while the balance of its revenue was derived from LED lighting products and sales of other electrical products.

Basic earnings per share for H1 was 5.55 Singapore cents, compared with 4.12 Singapore cents during the same period a year ago.

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As at Jun 30, the group’s net asset value per share was S$0.38, which is on par with the level recorded as at Dec 31, 2021.

However, the company is not declaring an interim dividend for H1, as it intends to conserve cash, with the board recommending instead an annual dividend payment together with its audited full-year results.

The group’s cash and bank balances stood at S$241.6 million. Its cash generated from operations for H1 was S$84.4 million, more than double the S$41.5 million seen in the same period last year.

The company said the increase was mainly attributable to the higher earnings before interest, taxes, depreciation, and amortisation (Ebitda) as well as the increase in working capital compared with a year ago.

Its group order book also remains healthy at S$816 million as at Jun 30, the company said. It has also since received additional orders of S$11 million as at Jul 25, bringing its total order book secured to S$827 million, of which S$450 million is planned for completion in the current financial year.

Looking ahead, Aztech said higher energy prices, rising interest rates, supply chain constraints amid threats of possible Covid-19 restrictions bring volatility to the operating landscape. However, it said it remains sanguine about the global demand for IoT devices, data communication products and smart lighting solutions for the long term.

“It believes that the healthy order book secured to date, resilient balance sheet and experienced nimble team will enable the group to navigate the uncertainty and volatility confidently,” the company added.

Aztech’s shares closed flat at S$0.795 on Monday.