Brokers' ' take: Experts reduced targets for Aztech Global blog post FY2021 results
DBS Team Study and also Maybank Stocks have actually reduced their cost targets for Aztech Global 8AZ while preserving their “get” gets in touch with the mainboard-listed technology items firm, adhering to the launch of its FY2021 results on Tuesday (Feb 23).
After cutting its cost target to S$ 1.54 from S$ 1.67 earlier in February, DBS has actually lowered it more to S$ 1.48.
In a study note on Wednesday (Feb 23), DBS expert Ling Lee Keng stated the brand-new cost target follows considering reduced gross margin presumptions, which have actually led to a 4 percent down revenues alteration for both FY2022 and also FY2023.
The target is secured to a peer standard of 12 times FY2022 revenues price quotes.
DBS’s internet margin presumptions for the firm have actually likewise been reduced a little to 11.5 percent for FY2022 and also 11.6 percent for FY2023, compared to 12 percent formerly for both .
This however continues to be over the market standard, stated Ling, that thinks the predicted internet margins need to result in revenues development of 28 percent and also 20 percent for FY2022 and also FY2023, specifically.
Talking About Aztech Global’s “amazing” collection of FY2021 results that can be found in line with DBS’s assumptions, Ling kept in mind that gross margin for the complete year finished Dec 31, 2021 was a weak 24.9 percent in contrast to 28.5 percent in FY2020 amidst supply chain difficulties.
The expert nevertheless kept in mind that the team’s general internet margin stayed solid at 11.9 percent, which is over the market standard.
She likewise remains to such as Aztech Global for its solid superior order publication, which stood at a boosted S$ 762 million as at Feb 22, 2022 compared to S$ 496 million as at end-2021.
” Though the circumstance has actually boosted from in 2014, the team still deals with element lacks and also logistics difficulties because of variables like port blockage and also lack of employees. As we are still in the very early component of the year, we anticipate the team to protect even more orders for fulfilment in 2022,” stated the expert.
While Aztech Global’s outcomes defeat Maybank’s assumptions for H2 FY2021, the brokerage firm has actually cut its cost target by 10 percent to S$ 1.13 from S$ 1.26 as it sees a danger in the firm being not able to satisfy its existing order publication because of element lacks.
Maybank expert Lai Genetics Lih kept in mind in a Wednesday record that the appraisal of 10 times FY2022 revenues price quotes stands for a 15 percent discount rate to the supplies’ worldwide electronic devices producing solutions peers, which are trading at regarding 11.7 times.
As the schedule of particular parts continues to be limited regardless of a mild renovation in chip lack, Lai thinks the team will certainly remain to encounter revenues dangers – also if it is most likely to proceed winning brand-new orders throughout the year.
The expert is likewise worried over the longer-term potential customers of commoditisation-driven margin disintegration of the Net of Points items for Aztech Global’s primary consumer, which he approximates to have actually added to greater than 70 percent of the team’s H2 profits.
” If chip lacks dissipate materially and also the need expectation continues to be solid, we see area for higher modifications in our price quotes, and also this might likewise be a product driver for the supply,” he stated.
Shares of Aztech Global were trading S$ 0.045 or 4.9 percent greater at S$ 0.96 as at 2.30 pm on Wednesday.
