CGS-CIMB Research is keeping its “add” rating on ISDN Holdings with an unchanged target price of 70 cents following a post-1QFY2022 ended March business update call hosted by the research house. ISDN’s 1QFY2022 business update was released on June 10.
With China’s economy reopening, the group’s management believes that the worst of the Covid-19 lockdown in China is over.
However, thanks to the lockdown, one of the group’s three mini-hydropower projects in Indonesia, Lau Biang, has experienced delays in construction.
“We think possible issues include delivery delays for equipment required for the operation of the mini-hydropower plant as a result of China’s recent port lockdowns. ISDN hopes that construction of the Lau Biang plant can be completed by end September,” says analyst William Tng.
On the other hand, two of the group’s other three mini-hydropower projects in Indonesia – Sisira and Angocci – are already operational and have been since September 2021.
However, ISDN has not been able to bill the customer for the electricity supplied from these power plants as there are certain permits required that are still outstanding, which the company is working to resolve. Fortunately, Lau Biang does not face such permit issues.
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Meanwhile, with its strength in the hardware part of industrial automation (via its product partners), ISDN is now looking to increase its efforts on the software side of the automation process via offering cloud solutions that provide a comprehensive view of the data that its customers are able to collect though their automation efforts.
Reflecting this commitment, ISDN appointed Tay Geok Kee as its group CTO on Jan 1 this year. Tay brings over 30 years of industrial automation experience to ISDN, including building automation and software cloud solutions for some of the largest industrial companies in Asia.
While the group is positive on its outlook, it is aware that it may have lost some customers. ISDN noted that some customers who had urgent orders to fulfil in 1QFY2022 had to turn to alternative products during the recent lockdown in China. The group says as the lockdown situation improves, these customers are coming back with inquiries.
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As at 3.50pm, shares in ISDN are trading 4.1% lower at 46 cents or 0.94 times FY2022 book with a dividend yield of 3.2%.
Photo: ISDN Holdings
