Aztech shares jump over 17%; CGSI upgrades stock to ‘add’, lifts target 46.2% despite earnings miss

[SINGAPORE] CGS International upgraded Aztech Global to “add” from “hold” and raised its target price for the tech manufacturer by 46.2 per cent to S$1.14, from S$0.78, despite disappointing first-quarter earnings.

The company’s Q1 net profit, released on Tuesday (Apr 28), came in at S$4 million and missed expectations, but the investment house says earnings recovery is “likely”. Its revenue of S$64.7 million was in line with expectations.

CGSI analyst William Tng noted the “historical seasonality” of Aztech’s performance, with Q1 typically the weakest quarter.

“Despite the slow start to FY2026, we expect Aztech to see quarter-on-quarter improvements in Q2 to Q3, based on historical trends, and retain our earnings forecasts,” said Tng.

The group’s Q1 net profit, though 166.7 per cent higher year on year, was just 9 per cent of CGSI’s and a Bloomberg consensus’ forecasts for the full year and was “below expectations due to (an) unrealised foreign exchange loss of S$1.8 million”, said CGSI.

Aztech had benefited from a S$3.1 million gain from the sale of its property in Dongguan, China, but was hurt by the unrealised foreign exchange loss, the investment house said.

However, Tng noted that Aztech secured six new project orders in Q1, with commercial production started during the quarter, as well as added two new customers in the security and renewable energy segments.

“The project wins and new product introduction progress support medium-term customer and revenue diversification, despite modest early-stage revenue,” said Tng, citing Aztech’s management in its Q1 2026 business update released on Tuesday.

Order cancellations due to an economic slowdown affecting demand and volatile foreign exchange rate movements affecting financials are downside risks, he said.

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Another boon for Aztech is a potential rally driven by the Equity Market Development Programme (EQDP), said Tng.

With FY2026 to FY2028 forecasts for Aztech unchanged, CGSI sees an earnings recovery with a compound annual growth rate of 7.4 per cent, supported by projected dividend yields of 4.3 to 4.7 per cent

“EQDP buying support could re-rate Aztech to 19 times, three standard deviations above its five-year average price-to-earnings ratio over FY2022 to FY2026, leading us to raise our target price to S$1.14,” he said.

Aztech shares rose as much as 17.7 per cent on Wednesday to S$1.03 as at 2.36 pm, with nearly 32 million shares traded.

Year to date, the counter has gone up 57.3 per cent from its S$0.655 closing price on Dec 31, 2025.

It was among the group of tech stocks that staged a rally last week on the back of a stronger-than-expected 15.3 per cent surge in Singapore’s key exports due to artificial intelligence-linked demand.