For the three months to March, earnings surged 31x y-o-y to $3.7 million, on the back of a 24.2% jump in revenue to $113.7 million, driven by its industrial automation segment.
"The group saw strong demand in the from semiconductors and industrial robots. ISDN is benefitting indirectly from the global growth in AI, data centres, semiconductors and energy storage, as it supplies a broad range of components and solutions to these sectors," says Tng.
ISDN says its order intake will continue growing this current financial year, underpinned by strong industrial automation demand.
In addition, its renewable energy segment grew 39.3% y-o-y to $6.7 million in 1Q26, driven by construction income from its two new mini-hydropower plants in Indonesia which are on track for completion this year.
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However, three of its existing plants generated revenue that was 39% lower because of "highly unusual" weather variations. ISDN says that weather has since "normalised" and fluctuations of such magnitude is not seen to recur.
Tng continues to value this counter at 24x FY2027 earnings, which is 1 sd above its FY2017 to FY2026 average.
He expects the company's earnings growth to resume over FY2026 to FY2028 at a CAGR of 45.6%.
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"We think the stock could also attract buying interest from Equity Market Development Programme (EQDP) funds," he says.
For Tng, re-rating catalysts: higher-than-expected earnings contribution from its hydropower business segment, a faster pace of economic growth in China as it stimulates its economy, and a stronger global semiconductor recovery.
On the other hand, downside risks include weak customer demand if the global economy continues to slow, and potential bad debts as economic conditions worsen.
ISDN shares closed at 68 cents on May 22, down 2.17%, but up 73.08% year to date.
