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ISDN Holdings

Aiming for the stars

ANGELA TAN finds out why ISDN is confident of its growth prospects

20 December 2005
The Business Times

FOR some people, the sky is the limit. But for one Singapore-listed small cap company, the moon or rather, Mars, is the limit - literally.

Investors may not be aware but recently listed ISDN Holdings Limited, a supplier of motion control and industrial computing solutions, is playing a major part in China's ambition to dock on the moon by 2012.

'Our joint venture partner and we have started working on the prototype units for Chinese companies involved in developing vehicles for the space mission,' ISDN's founder and chief executive officer Teo Cher Koon told BT in an interview last Friday.

ISDN's partner is Swiss-based Maxon Motor Ag, which owns 2.5 per cent of ISDN. Maxon is well-known for supplying motors to Nasa's space rovers, which successfully landed on Mars in January 2004. (Some Singaporeans may remember the Heineken advertisement featuring the rover).

The Swiss group has been collaborating with the Mars missions since 1992, when Nasa asked the company to supply motors for the Sojourner mission. Over the years, it has supplied about 3,000 motors for a variety of Nasa projects. In 1995, ISDN entered into a joint venture with Maxon to set up Maxon Suzhou to assemble motion control systems.

Tapping opportunities

Apart from the space sector, ISDN - which has been in the market for 18 years - plans to work more closely with Maxon to target more customers in China's fast-growing medical and automotive sectors.

The joint venture already supplies products to medical equipment makers in China. But huge opportunities remain untapped. Take, for example, the makers of insulin pumps.

Mr Teo reckons that there are more than 35 million diabetic patients in China, and they are increasing by about 1.2 million a year. This will indirectly fuel the demand for ISDN's products and expertise.

'The growth in China is huge. China will be the biggest factory in the world over the next 10 years,' Mr Teo said.

'Anything that needs industrial motor control will require our services. We are targeting a wide array of sectors. Medical is just one because standard of living is rising. The sector is booming and medical equipment is going into volume production,' he added.

The other sectors targeted included robotics, aerospace, hard disk drive, water treatment or oil and gas industries. Boasting more than 2,000 customers, ISDN is looking to diversify its earnings base and reduce its reliance on semiconductor.

For fiscal year ended Dec 31, 2004, ISDN made a net profit of $5.78 million on a turnover of $53.46 million. Its motion control division - which specialises in design, sale and installation of motion control systems - accounted for 87 per cent of group revenue. Its industrial computing division - which installs software on computer systems for customers - accounted for about 13 per cent of group sales.

Mr Teo is confident of ISDN's growth prospects.

'The growth in China is strong. We already have 13 offices and are still expanding,' he said.

Focus on Asia

Apart from China, ISDN is also looking to expand in Taiwan, Vietnam, India and Indonesia.

'The focus will be in Asia,' he said, before jetting off to India for business.

In terms of budget, ISDN has put aside $1.5 million of the $6.43 million net proceeds raised from its initial public offer in November for acquisitions, joint ventures and strategic alliances.

'We want to grow organically and through acquisitions. The companies we are looking at must have synergies with us,' Mr Teo said. He did not dismiss the possibility of ISDN tying up with its suppliers to form joint ventures like Maxon Suzhou.

Optimism and confidence over ISDN's prospects are infectious. ISDN's executive director Kong Deyang bought an initial 300,000 shares on Nov 28 and a further 240,000 shares on Nov 30 at 30.3 cents each.

The shares, listed on the SGX mainboard on Nov 24, are trading around 30 cents these days, compared to its initial public offer at 29 cents each.

ISDN plans to distribute dividends of up to 50 per cent of its net profits for the current financial year.