ISDN Holdings' 3Q18 profit attributable to shareholders of $2.4 million boosted its 9M18 profit to $12.5 million. Teo Cher Koon, MD & President, ISDN Holdings.This already exceeds the $9.5 million achieved for the whole of 2017.The integrated engineering firm (which is dual-listed in Hong Kong) said it is now "on track to end 2018 with the highest full-year earnings since its public listing on the Singapore Exchange in 2005, barring unforeseen developments." It said its performance is driven by growing domestic demand for high-tech precision control systems from medical device manufacturers, coupled with a consistently growing customer base. The strong performance, however, is not reflected in ISDN's stock price movement. At 20 cents, it trades at a trailing PE ratio of 5.5 and a 3% trailing dividend yield. Since 2017, ISDN has adopted a target to pay 25% of its earnings as dividend. |
The table summarises the results. More information can be found in ISDN's statement.
|
S$’000 |
3Q18 |
3Q17 |
Change |
9M2018 (S$'000) |
9M2018 (S$'000) |
Change |
|
Revenue |
68,739 |
76,693 |
(10.4) |
230,843 |
221,720 |
4.1 |
|
Gross profit |
19,307 |
19,180 |
0.7 |
61,010 |
55,230 |
10.5 |
|
Gross profit margin % |
28.1 |
25.0 |
12.4 |
26.4 |
24.9 |
6.0 |
|
Net profit |
2,391 |
2,984 |
(19.9) |
12,467 |
7,715
|
61.6
|
According to a Frost & Sullivan report, ISDN ranked first and fourth in terms of revenue in 2015 in the Singapore and the PRC motion control solutions markets, respectively.
ISDN's 3Q18 dip in revenue and net profit reflect the cautious business sentiment in China amid the growing trade dispute between the US and China, which is its largest market by revenue.
| Motion control solutions • Account for the majority of ISDN's revenue. • ISDN designs, customises and assembles systems made up of servo motors, drives, gearboxes and encoders. • Growing with trend of intelligent manufacturing and factory automation. |
But ISDN said it expects "its diversified customer base to offer some respite during this time."
It has more than 10,000 customers, ranging from SMEs to larger companies and MNCs from a broad range of sectors, including medical, aerospace, defence, automotive and semiconductor.
"At the same time, the emerging trend of reliance on automation and robotics in manufacturing should underpin demand for the Group’s engineering services."
|
Stock price |
20 c |
|
52-week |
20 – 25c |
|
PE (ttm) |
5.5 |
|
Market cap |
S$79 m |
|
Shares outstanding |
395 m |
|
Dividend |
3% |
|
1-year return |
-14% |
|
Source: Bloomberg |
|
Mr Teo Cher Koon, ISDN’s Managing Director and President, said: “Our motion control and specialised engineering solutions will always be required by various industries to support their diverse engineering needs. But we are continuously thinking out of the box to find ways to expand our capabilities and develop additional growth engines.
“This year alone, for example, we announced some strategic partnerships that are expected to propel our diversification into the renewable energy and infrastructure sectors.
"These tieups could pave the way for the use of blockchain technology to more efficiently trade and distribute solar energy among a diverse community of producers and consumers.”
 Photo: Company Mini-hydropower plants in Indonesia coming online Photo: Company ISDN said its mini-hydropower plants will yield some definitive results from 2019.  Photo: Company Its first two plants, capable of producing 4.6MW and 9MW of electricity respectively, are expected to be operational by the middle of next year. A third plant, which can yield 10MW, will be ready by 2020. This 10MW facility is the first of five plants with similar production capacities that ISDN will be rolling out. That's not all: ISDN has another eight hydropower plants in the pipeline in Indonesia. Solar energy: In China, ISDN has been operating a 1MW rooftop solar power plant at its industrial park in Wujiang, an urban district in Suzhou, for the past eight months. In addition, in collaboration with Hong Kong-listed Comtec Solar Systems, ISDN intends to set up an energy storage system at the industrial park soon to showcase its energy storage capability. |
