The Worst Might Be Over For Aztech Group

Aztech Group (SGX: 560) announced its first quarter results yesterday. This conglomerate has been facing some headwinds since 2011 when its marine business suffered a downturn. During those troubling times, the company even had to write off some assets.

However, beginning last year, the company had successfully turned its business around and started to earn some profits. With Aztech’s latest first quarter results, it seems the worst might really be over for the company.

Aztech’s results

With the rebound of its marine business, the company recorded revenue of S$85.58million, which is 2.9% better from the last quarter and represents an astonishing 93% improvement from a year ago. The revenue from its marine and material supply business now contributes to 53% of its total revenue.

Asia Pacific continues to be Aztech’s key geographical market, contributing about 73% of the company’s revenue. But while top-line growth was frankly, astonishing, the company had suffered a margin squeeze during the quarter, with gross margin dropping from 12.5% a year ago to only 10.2%. This is due to the lower margins experienced in the marine and material supply business. Nonetheless, Aztech still achieved a net profit of S$1.68million, an increase of more than 4 times its profits in the previous year.

The company has a higher gearing ratio at the end of this quarter at 0.64, which is up 6.7% from the last quarter. This is mainly due to the increase in its short term borrowings. On the cash flow side, the company continues to log a negative quarterly operation cash flow mainly due to the increase in trade receivables.

Foolish Summary

Aztech ended the quarter with earnings per share of 0.35 Singapore cents. Its net asset value per share improved to 17.73 cents. At its last traded share price of S$0.157, the company is valued at around 12 times its earnings over the last 12 months and at 0.9 times its book value. Interestingly, the price of its shares has roughly doubled since its crisis in 2011.

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.  

The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook  to keep up-to-date with our latest news and articles.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.