Aztech Global lodges preliminary prospectus for mainboard listing

AZTECH Group has lodged a preliminary prospectus for a mainboard listing of its technology unit, Aztech Global, on the Singapore Exchange (SGX), the conglomerate said on Wednesday.

Aztech Global, formerly known as Aztech Electronics, provides one-stop design and manufacturing services with products including Internet of Things (IoT) devices, data-communication products and LED lighting products. It has more than 290 customers worldwide and its products are sold in more than 40 countries.

It intends to use the proceeds from the issuance of new cornerstone shares to expand and enhance its manufacturing facilities, expand the company, enhance its research and development capabilities, increase sales and marketing channels for overseas expansion and expand its original design manufacturing and joint development manufacturing businesses to capitalise on opportunities in IoT.

For the nine months ended Sept 30, 2020, Aztech Global reported a net profit of S$30.5 million, down from S$35.3 million in the corresponding period of the previous year. It attributed this mainly to a decrease in revenue from its LED lighting products segment, resulting from a mandatory temporary shutdown of its manufacturing facilities in Q1 2020 due to the Covid-19 pandemic, and to the group's decision to focus on products with higher profit margins such as smart lighting, IoT and data-communications products.

In FY2019, full-year net profit was S$47.2 million, which was more than double the S$20 million in FY2018.

Revenue in the first nine months of FY2020 was S$262.2 million, compared to S$326.2 million in the same period of FY2019. Full-year revenue in FY2019 was S$428.8 million.

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While the group does not currently have a fixed dividend policy, it intends to recommend dividends of at least 30 per cent of net profit after tax (excluding exceptional items) generated in FY2021 and FY2022.

For the first nine months of 2020, the IoT devices and data-communication products segment accounted for 82.6 per cent of total revenue, up from 66 per cent in the same period of FY2019. LED lighting products accounted for approximately 17.2 per cent of total revenue in the nine-month period for FY2020, down from 33.9 per cent in the corresponding period a year prior.

Eighteen parties have committed to participate as cornerstone investors; they include AIA, AIA Investment Management, DBS Bank, Eastspring Investments (Singapore), Employees Provident Fund Board, HSBC Global Asset Management (Hong Kong), JPMorgan Asset Management (Singapore), New Silk Road Investment, Tokio Marine Life Insurance Singapore and UOB Kay Hian on behalf of certain corporate clients.

UOB, Maybank Kim Eng and DBS are the joint global coordinators, book runners and underwriters of the initial public offering.

Aztech Group was previously listed on the SGX, starting out on the Catalist board's predecessor, the Sesdaq, in 1994 and moving to the mainboard 12 years later. In 2017, co-founder and chief executive Michael Mun Hong Yew took it private through his special-purpose vehicle AVS Investments.