ISDN Holdings (I07) H1 2024 earnings summary

Executive summary

• 1H2024 revenue rose 2.4% YoY to S$174.6m as China automation and hydropower growth offset weaker Southeast Asia industrial automation demand; revenue also rose 1.9% sequentially.

• Profit after tax fell 35.9% to S$5.8m; profit attributable to shareholders declined 17.4% to S$3.8m amid lower gross profit, higher expenses and hydropower-related withholding tax.

• Operating cash flow was S$15.5m versus an outflow of S$1.1m in 1H2023; cash and bank balances were S$60.8m at 30 June 2024.

Financial highlights

• Revenue was S$174.6m, up 2.4%; gross profit was S$44.4m, down 2.6%, and gross margin was 25.4%, down 1.3ppt YoY.

• Profit before tax fell 36.2% to S$8.5m; profit after tax fell 35.9% to S$5.8m, while attributable profit declined 17.4% to S$3.8m.

• Operating expenses rose 8.7% to S$34.2m; distribution costs increased 15.4% to S$14.4m, administrative expenses rose 4.3% to S$19.8m and finance costs increased 33.6% to S$2.8m.

• Income tax expense fell 36.8% to S$2.7m; basic and diluted EPS was 0.85 Singapore cents versus 1.04 cents, and net profit margin was 3.3% versus 5.3%.

• Industrial automation gross margin declined 2.3ppt to 23.5%.

Outlook and guidance

• Management was cautiously optimistic about improving demand stability and gradual recovery, while noting the timing and pace of a full manufacturing and industrial recovery remained uncertain.

• Prolonged macroeconomic recovery, geopolitical tensions and fluctuating inflation data remained concerns; costs would be actively managed while balancing near-term earnings and growth investment.

• Expanded full-stack automation solutions and market development in Malaysia and Taiwan are intended to support distribution and long-term growth; wage inflation and advanced manufacturing underpin Southeast Asia automation demand.