Highlights

• 2Q26 earnings of S$5.4m (-36% yoy; +35% qoq) are below our expectation, bringing 1H26 earnings of S$9.4m to form 22% of our full-year estimate.
   
• Revenue declined by 40% yoy in 2Q26 due to reduced customer demand fromhigher competition. Aztech expects near-term demand softness in 2H26.
   
• Downgrade to HOLD with a 45% lower target price of S$0.73. We cut 2026 and 2027 EPS by 54% and 41% to reflect the challenging business outlook.
   

Analysis

• 2Q26 earnings below expectations. Aztech Global’s (Aztech) 2Q26 net profit of S$5.4m (-36% yoy; +35% qoq) is in line with our expectation, bringing 1H26 earnings of S$9.4m to form 22% of our full-year estimate. Revenue and profit declined yoy due to reduced volume from existing customers from increased competition. Net profit fell 63% yoy due to lower revenue, reduced interest income of S$0.7m and foreign exchange loss of $1.2m.
   
• Challenging business outlook for the near term. Aztech expects softer customer demand for 2H26. While Aztech maintained its NPI pipeline, the
  ramp-up and revenue contribution from these projects are expected to be gradual. Contributions from these projects in the near term will not fully offset the lower order volume from existing customers arising from increased competition. The operating environment is expected to remain challenging amid ongoing macroeconomic and geopolitical uncertainties, evolving trade dynamics, cost pressures and limited visibility on customer demand.