“Nordic’s revenue compound annual growth rate (CAGR) of 9.3% from 2010 to 2024 suggests that acquisitions have had meaningful long-term impact on topline growth. These acquisitions also provide strategic risk diversification benefits by securing distinct sources of revenue, with subsidiaries like Starburst and Envipure providing exposure to less correlated sectors like defence and sustainability,” states Goh.
From Goh’s perspective, such acquisitions stabilise revenue streams for more sustained returns in the long term. He sees Nordic’s ability to drive inorganic growth opportunities has been supported by its strong balance sheet with net gearing ratio stood at 13% as at end of FY2024 and declined to a low level of 3% as at 30 Sep 2025.
These series of acquisitions allowed Nordic to pivot its revenue towards more stable avenues in maintenance services from project services, with the latter falling from 73.1% of revenue to 50.4% from FY2015 to FY2024, while the latter increased from 26.9% to 49.6% in the same period.
Meanwhile, its order book strengthened to $209.2 million as at Sep 30 2025 from $201.6 million at the end of FY2024. This was due to a jump in maintenance contracts that provided increased revenue visibility to the group. Nordic subsequently announced $70.3 million worth of contract wins in early Dec 2025 from new and repeat customers.
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“From a sector viewpoint, we believe Nordic’s exposure to defence and sustainability provides fundamental strength to their revenue base, as these sectors are part of the Singapore government’s long-term initiatives, which saw spending in defence and sustainability increasing 59.1% and 97.7% to $20.9 billion and $3.3 billion respectively, from 2015 to 2024, according to data from SingStat,” adds Goh.
On the financial front, Nordic’s revenue came under pressure in FY2023 and FY2024, declining 1.3% to $160.6 million and by 1.4% to $158.4 million respectively, due to project delays and higher labour costs.
“Nordic has cited rising interest rates and inflationary pressures as difficulties during this period, which were consistent with a sharp decline in Singapore’s industrial production that registered an average y-o-y growth of -4.4% per month from Oct 2022 to Oct 2023,” according to Goh.
“Looking ahead, we forecast revenue to grow by 5.0% and 7.6% in FY2025 and FY2026 respectively, underpinned by an expected recovery in project wins and continued growth in maintenance services due to a rebound in the industrials sector,” predicts Goh.
With the commencement of rate cut cycle in Sep 2024 by the US Federal Reserve, Goh mentioned that this has bolstered economic activity and industrial demand, with Singapore’s industrial production registering an average y-o-y growth of 6.4% per month from Jul 2024 to Sep 2025, which is nine percentage points (ppt) higher compared to the monthly average of the preceding 15-month period.
“We expect such developments to be favourable to Nordic, especially towards its project pipeline which is sensitive to demand. Global inflation has also fallen from 8.7% in 2022 to an estimated 4.2% in 2025 based on the IMF, which should provide relief and headroom for
Nordic to expand its profit margins in the near term,” says Goh.
As such, the analyst has initiated coverage on Nordic with a “buy” rating with an attractive upside potential of 37%.
“We believe Nordic’s P/E ratio multiple has room for expansion, given that it is trading at a discount to historical average levels. We apply a target P/E ratio multiple of 11.3 times, which is in-line with Nordic’s 10 Year historical trailing 12-month average P/E ratio multiple, to our forecasted FY2026 earnings per share (EPS) of 5.24 Singapore cents and thus derive a fair value estimate of 59 cents,” concludes the analyst.
As at 9.20 am, shares in Nordic are trading 0.5 cents higher or 1.16% up at 43.5 cents.
