Excerpts from CGS-CIMB report
Analyst: William Tng, CFA
■ FY21 net profit was in line with expectations at 98% of our full-year forecast.
■ Reiterate Add. Progress in its hydropower business in Indonesia could catalyse the share price in FY22F.
FY21 net profit was also the highest net profit on record since ISDN listed in 2005.
Expects automation trend to continue
Our FY22-23F EPS are reduced slightly by 0.6-0.7% as we factor in the larger share base given the scrip dividend in FY21.
Our TP is reduced slightly to S$0.96, based on 12.3x FY23F EPS forecast.
Our 12.3x target P/E multiple is 2 s.d. above ISDN’s FY17-21 historical average forward P/E of 7.9x.
Previously, we used a P/E multiple of 12.8x (sector average).
Potential re-rating catalysts include earlier profit contribution from its hydropower segment.
Downside risks include a prolonged Covid-19 outbreak, leading to travel restrictions which could affect ISDN’s ability to service its customers.
Full report here.