Aztech Global stokes bullish sentiment with IoT focus, chunky margins

DBS, Maybank and CIMB analysts, who have begun covering Aztech Global’s stock, are giving glowing reviews to the Singapore-listed tech name.

  • Aztech Global Limited (SGX: 8AZ) share price rallies to a new peak of S$1.56 per share
  • DBS analysts said Aztech is ‘in a sweet spot’ to ride the IoT market’s growth
  • Maybank likes Aztech’s fatter-than-average margins and growth prospects
  • Buy and sell Singapore stocks with an IG account

Aztech Global stock price: What’s the latest?

Shares of stock-market newcomer Aztech Global closed at S$1.52 on Monday (26 April 2021), advancing 7.8% on a heavy volume of 27.6 million securities. The stock then hit S$1.56 at 9:25 SGT on Tuesday.

The electronics manufacturer went public in March 2021. Its key products include Internet of Things (IoT) devices, data-communication products, and LED lighting products.

Of the three research teams that initiated coverage last week, all issued ‘buy’ recommendations.

CIMB set a target price of S$1.91, noting that downside risks include customer concentration risk and high competition.

Will Aztech ride the swelling IoT wave?

DBS Group Research, in giving a S$1.85 target price, pointed out that Aztech Global has about 90% revenue exposure to the IoT market, which remains at a nascent stage of growth.

‘Aztech is in a sweet spot to ride on the fast-expanding IoT market, which is projected to grow at a CAGR (compound annual growth rate) of 20.8% during 2019-2023,’ DBS wrote.

CIMB’s research team said that as consumers invest in the smart-home ecosystem, Aztech has the opportunity to further broaden its IoT product-manufacturing portfolio within the smart-home value chain to drive its multi-year earnings runway. CIMB set a target price of S$1.91.

Similarly, Maybank’s Lai Gene Lih sees Aztech as a proxy of the consumer IoT industry, through the smart security cameras and other new products for ‘Customer A’, a US-listed e-commerce retailer. Lai also touted Aztech’s wallet share gains from a German e-commerce retailer, ‘Customer C’.

What sets Aztech apart from its rivals?

DBS analysts opined that Aztech’s research and development (R&D) capabilities and technological strength enable the group to be a one-stop service provider, and are its ‘key differentiators’ from peers.

R&D helps Aztech engage customers early in product conceptualisation, and enables rapid commercialisation of emerging trends, Maybank’s Lai said.

Another of the company’s strengths is its diversified footprint. Aztech intends to double its manufacturing capacity through a new plant outside of China, which will diversify geographic risks from diseases, trade tensions, and disasters, Maybank added.

Will Aztech continue to enjoy ‘superior’ margins?

Aztech’s margins are ‘among the highest in the industry’ and ‘superior’ to Singapore-listed peers, according to Lai.

Robust R&D, design capabilities, and strong execution could help sustain margins in the near to mid-term, he wrote.

Maybank is eyeing a S$1.86 target price, based on 18 times of core 2021 price-to-earnings, above its peers’ 13.4-13.5 times. Lai believes this is ‘justified’ given Aztech’s ‘superior growth and margin prospects’.

DBS projected ‘above-industry average’ net margins of 11.5% in 2021 and 2022, driven by the IoT market’s solid growth and the group’s efforts to improve productivity and efficiency.

‘This should lead to robust earnings growth of about 40% in 2021 and 2022,’ DBS added.

Trade Singapore's most popular stocks with IG

Create an IG account or log in to your existing account to get started now.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Explore the markets with our free course

Learn how shares work – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.

Put learning into action

Try out what you’ve learned in this shares strategy article risk-free in your demo account.

Ready to trade shares?

Put the lessons in this article to use in a live account – upgrading is quick and easy.

  • Trade on over 16,000 popular global stocks
  • Protect your capital with risk management tools
  • React to breaking news with out-of-hours trading on 70 key US stocks

Inspired to trade?

Put your new knowledge into practice. Log in to your account now.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.