InnoTek (M14) H1 2023 earnings summary

Executive summary

• H1 2023 revenue rose 10.0% to S$92.861m; net profit was S$3.106m versus a S$1.668m loss in H1 2022.

• Recovery reflected a 16.9% gross margin versus 13.7%, higher OA and emerging-business revenue, improved efficiency and lower scrap rates.

Financial highlights

• Gross profit increased 35.5% to S$15.659m from S$11.559m; profit before tax was S$3.811m versus a S$1.645m loss.

• Cost of sales rose 5.9% to S$77.202m, reflecting higher sales and product mix despite lower steel and aluminum prices.

• Operating cash flow was negative S$3.268m, including S$10.788m of working-capital outflows from receivables and contract assets; cash and cash equivalents fell to S$36.764m from S$56.806m at year-end 2022.

Outlook and guidance

• OA received a short-term demand boost from higher orders and sub-assembly momentum; manufacturing shifts from China to Southeast Asia remain a longer-term trend.

• Medical equipment, AI GPU servers and gaming machines were expected to make significant progress through the rest of 2023; high-end GPU-server metal-casing production and gaming-machine production ramped up.

• Automotive conditions were expected to remain challenging in China and overseas; priorities include adapting products for overseas customers and pursuing EV opportunities.

• Rayong capacity expansion and Bac Ninh production support OA orders and regional growth; QCDS, cost control and sub-assembly development remain priorities.