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ISDN beats expectations with 72.5% growth in 1H earnings to $9.6 mil; share price hits 52-week high

Samantha Chiew
Samantha Chiew • 2 min read
ISDN beats expectations with 72.5% growth in 1H earnings to $9.6 mil; share price hits 52-week high
It's a good season for ISDN with its share price reaching a 52-week high and 1H earnings recording a 72.5% growth
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Shares in ISDN Holdings surged some 8.22% today to close at 40 cents, just before the group announced a 72.5% increase in its 1H20 earnings to $9.6 million from $5.2 million in 1H19, which surpassed its positive profit alert announced on June 28.

With most companies warning of a loss in their upcoming results, ISDN broke the trend and informed investors that it expected to record an earnings growth of at least 50% for 1H20.

On Aug 6, KGI Securities also initiated an “outperform” call on ISDN with a 42 cents target price, and expected earnings to increase by some 64%.

See: KGI Securities initiates ‘buy’ on ISDN on strong performance from robotics industry and surprise profit announcement

ISDN managed to beat estimates with its earnings growth, as revenue saw a 13.8% increase to $167.2 million from $147.0 million a year ago.

The revenue increase was attributable to the growing demand for the group’s core industrial automation solutions in Southeast Asia, including Singapore, Malaysia, and Vietnam, because Southeast Asia has received benefits from the reconfiguring of global industrial supply chains.

In addition, ISDN recorded construction revenue of approximately $20.1 million from the construction of mini-hydropower plants in Indonesia.

Cost of sales increased by 13.8% y-o-y to $125.8 million, bringing gross profit to $41.3 million, 10.5% higher than $147.0 million last year.

The group’s business focus continues to be predominantly in China, which contributed approximately 60.0% in 1H20, while Singapore, Hong Kong and Malaysia as other major contributors to its revenue, accounting for 14.8%, 1.9%, and 2.6% respectively.

As at end-June, cash and cash equivalents stood at $45.2 million.

At first, the group’s China operations were impacted by the extended Chinese New Year holidays, but thankfully, its diversified portfolio allowed it remain resilient and quickly respond to the changing global conditions.

As the pandemic has accelerated digitisation efforts worldwide, it provided support to ISDN’s core business, allowing it to emerge as a winner amid the pandemic.

The group believes it is favourably positioned to benefit from this long-term digitalisation trend as it delivers a broad and deep set of high-tech precision control systems and remote automation technologies for its customers.

Teo Cher Koon, ISDN’s Managing Director and President says, “Looking ahead, we expect the pace of technology advancement to quicken and we will continue building out our strategic roadmap to buffer these medium-term volatilities and seize the long-term opportunities of Industry 4.0.”

YTD, shares in ISDN have increased by 64.5% to close at 40 cents on Aug 7.

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