SINGAPORE (July 1): CGS-CIMB Research is maintaining ISDN Holdings at “add” with a target price of $0.32 on the back of the company’s core business strength of providing value-added motion control solutions and strong partnerships.
Apart from not competing in the mass market and price-competitive core motor space, ISDN adds value by offering solutions that incorporate its principals’ motors to customers, rather than selling them the motors on a standalone basis.
In addition, it has forged a strong partnership with Maxon Motor AG, a Swiss manufacturing company which supplies high-precision drive systems to more than 55 countries. In December last year, this partnership was extended with a joint venture company to market Maxon’s products in Southeast Asia.
ISDN’s master software solution -- which enables customers to monitor their machinery remotely – also offers opportunities for its growth while the absence of an earnings drag from its renewable energy business through the hydropower plants in Indonesia.
CGS-CIMB analyst William Tng says, “Given that ISDN has more than 30 years’ experience in serving over 10,000 customers’ motion control requirements, we opine that ISDN could improve its profit margins and provide Industrial 4.0 solutions by offering a master software solution that would enable its customers to monitor their machinery remotely.”
“Potential catalysts include the streamlining of its organisation structure and earnings contribution from the hydropower business. Risks are prolonged US-China trade war and operational missteps in its hydropower pants,” Tng adds.
As at 3.52pm, shares at ISDN are trading at 24 cents, or 7.5 times FY20F core earnings.
