ISDN Holdings (I07) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 7.8% amid cyclical weakness in semiconductors and electronics; 2H revenue rose 2.0% sequentially from 1H, with improvement extending into early 2024.

• Profit after tax declined 51.6%; investment in software, cloud, AI and integrated solutions continued through the downturn.

• Three mini-hydropower plants entered commercial operation, supporting recurring annual net cash income of ~S$8m.

Financial highlights

• FY2023 revenue was S$341.766m, down 7.8% YoY; gross profit fell 13.9% to S$91.134m and gross margin declined 1.9ppt to 26.7%.

• Profit before tax was S$18.873m, down 41.1%; profit after tax was S$11.172m, down 51.6%, and profit attributable to shareholders was S$4.952m, down 66.1%.

• Basic EPS was 1.12 Singapore cents, down 66.4% YoY; 2H2023 profit attributable to shareholders was S$0.37m, down 89.5%.

• Operating expenses decreased 1.7% to S$66.714m; the FY2022-to-FY2023 net profit bridge cited an S$8.3m gross-margin mix impact and S$6.5m revenue impact, partly offset by lower opex and other items.

• Other operating income rose 39.1% to S$4.8m, including S$1.2m in compensation claims related to EPC contractor non-performance on hydropower projects.

Outlook and guidance

• FY2024 priorities include recovery from the China and semiconductor downturn, growing core automation, investing in capabilities and potential M&A, and deepening Southeast Asia presence.

• Management remained cautious on recovery but noted 2H2023 sequential improvement continued into early 2024; profitability was expected to recover with the cycle.

• Southeast Asia business was expected to recover alongside semiconductors; no semiconductor customers or market share were reported lost in the region.

• Plans include completing construction of hydropower plants 4 and 5 and expanding the clean-energy portfolio.