"Given the continued weakening order momentum and the time required to ramp up new customer production, we project a 60% y-o-y revenue decline in FY2025," states Ling in her June 27 note.
On June 26, Aztech announced the sale of a factory building in Johor for RM28.75 million, allowing the company to book a net gain of RM13.7 million, or $4.2 million.
This one-off gain aside, Ling warns that order momentum from Aztech's key customer, which accounts for 80% of its revenue, is seen to remain weak.
In 1QFY2025, the company suffered from a 67% y-o-y drop in revenue.
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"Though the group is working on onboarding new customers and launching new products, the progress is still slow, and unable to close the gap from the slowdown in order momentum from its key existing customer.
"Coupled with the uncertainties on the tariffs front, we continue to expect further weakness ahead," says Ling, who has cut her earnings estimates for FY2025 and FY2026.
For the current FY2025, she is projecting a 72% drop in earnings, even taking into account proceeds from the sale.
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For the coming FY2026, she expects higher contributions from new customers, and Ling figures Aztech's revenue can increase by 10% y-o-y. \
Her new target price of 38 cents is pegged to 15x FY2025 earnings.
Aztech Global shares closed at 60 cents on June 26.
