Aztech Global (SGX) Dated 8 Aug 2022
Michael Mun, executive chairman (right) and CEO, and Jeremy Mun, executive director and COO for Aztech Global Image source: BT
Aztech Global (SGX) Daily, 16-mth Chart source: Tradingview
Aztech Global reported better than expected 1st Half 2022 results on 25 Jul 2022, driven largely by its business segment supplying IoT and datacomm products to its key customer, Amazon.
Its share price quickly gapped up the next day and has steadily moved back up to the previous 'Volume Profile Indicator' resistance zone @ 0.93 - 0.95 (see Chart pink resistance zone).
Do note Aztech had fallen by more than 40% since its IPO (priced then at $1.28) and its share price had been struggling to go anywhere since the start of 2022. MayBank issued a “Buy” recommendation after the positive results, giving it a 12-months target price of $1.39. Pls also refer to the attached report below for their rationale.
From the attached chart (inset), we’ve included analysts’ consensus estimate for Aztech’s revenue and it’s projected to reach $1.04b in FY2024. The sector’s Price-to-Sales (P/S) valuation averages from 1x to 2x. At 1x P/S by 2024, Aztech’s share price can possibly hit $1.24, representing a 9% annualised growth rate from now. At 2x P/S, it may hit $2.52, representing a 25% annualised growth rate. These estimates are based on an assumption that Aztech achieved the stated revenue growth and I’ve added in a 5% p.a. dilution to its share price, just to be conservative.
Technical-wise, Aztech is likely still in base-building mode (i.e. 'accumulation by strong hands' mode). If you agree with Maybank's value proposition for Aztech, you can consider to 'add' on price weakness. As mentioned earlier the 'Volume Profile' resistance zone is @ 0.93 - 0.95. Failure to break past this resistance zone is likely to see price easing back to the 0.86 - 0.825 green buy zone.
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