Broker's take: CGS-CIMB says ISDN on track to post record fiscal 2020 earnings

CGS-CIMB has raised its target price for ISDN Holdings to 72 Singapore cents from 64.8 cents on better revenue prospects.

It reiterates "add" on the stock and said the integrated engineering solution provider is on track to report a five-year record-high revenue and net profit for fiscal 2020 despite the Covid-19 pandemic.

ISDN shares rose as much as 23.3 per cent or 10 cents to hit 53 cents in intra-day trading on Thursday, with 44 million shares changing hands as at 3.39pm. The last time the counter traded near this level was on Feb 18, 2014.

CGS-CIMB analyst William Tng said in a research note on Wednesday that ISDN's demand outlook is stronger than previously expected, hence the revised forecasts which led to a higher target price.

"Given stronger demand prospects, we raise our FY2020-2022 earnings per share forecasts by 10.9-13.7 per cent," he said.

CGS-CIMB also sees rerating catalysts from ISDN's fiscal 2020 results, as well as possible monetisation of its Indonesian hydropower business in 2021.

Potential rerating catalysts could come from stronger-than-expected sales orders for its mainstay industrial automation business and profit contribution from its hydropower segment.