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Addvalue Technologies Jumps 3,700% In 1H 2025/26 · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome back to The Deep Dive. Today, we're putting on our financial analyst
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  hats and really digging into the numbers for ad value technologies, LTD, or the AVT group.
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  That's right. We're looking at their interim financial statements for the first
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  half of the 2026 financial year, which ended September 30th, 2025.
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  And our mission here isn't just to read off a balance sheet.
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  We want to understand the story behind the numbers, what drove these results,
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  and we're comparing it to the same period last year, 1H 2025.
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  And what a story it is. I mean, this report suggests the company is at a genuine
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  turning point. I think that's putting it mildly.
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  The big headline here, the thing that just leaps off the page,
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  is the turnaround in profitability.
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  Pretty staggering. In the first half of 2026, the group posted a net profit
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  of just under $2 million, U.S.
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  $1.977 million to be exact. Okay, that sounds good on its own. But what's the context?
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  We'll compare that to the same period last year. In 1H 2025,
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  their net profit was just U.S. $52,000.
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  Wow. Yeah. That's a 3,702% increase.
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  You just don't see jumps like that unless something really fundamental has changed.
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  A number like that. Yeah. It forces you to ask questions, right?
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  Is this real? Is it sustainable?
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  So to figure that out, we have to start at the beginning, at the top line.
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  Let's take a look at the overall financial performance. Right.
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  So let's start with revenue. The foundation looks really solid here. It does.
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  Revenue jumped 54%. It went from about 5.7 million U.S.
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  Dollars in 1H 2025 to 8.75 million in 1H 2026.
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  A 54% growth rate in six months is fantastic.
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  But, you know, as we always say on this deep dive, growth for growth's sake
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  is meaningless. You need the margins.
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  Exactly. And this is where it gets really interesting. They didn't just sell
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  more. It looks like they sold better.
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  Gross profit was up 64 percent from about $2.8 million to $4.5 million.
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  So the profit grew even faster than the revenue. Precisely. And that points
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  directly to the gross profit margin.
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  Tell me about the margin. That's the real test of efficiency, isn't it? It is.
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  And it improved by four full percentage points. It went from 48 percent up to
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  52 percent. Four points is huge in this industry.
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  It's massive. And it tells you that the mix of products they sold during this
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  period shifted towards their more profitable offerings.
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  This wasn't just volume. It was quality revenue.
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  Okay, so that's critical. The growth is profitable. And that efficiency,
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  it should filter down through the rest of the statement.
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  It does. You see it in their EBITDA, which is a good measure of their operational earnings.
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  It surged from about $841,000 to over $2.8 million.
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  That's nearly a fourfold increase in cash from core operations.
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  So what about their spending? How did they manage their costs to achieve this?
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  Well, looking at the expenses, you can see some real strategic discipline.
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  Selling and distribution costs, for instance, only went up by 6%. Wait, hold on a second.
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  Revenue leaps 54%, but their selling expenses only go up 6%?
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  Mm-hmm. How is that possible?
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  Are they under-investing in marketing, or did they just get incredibly efficient?
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  That's a great question, and it likely points to the latter.
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  I mean, given the kind of specialized markets they're in, we're talking space
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  connectivity, advanced digital radio, a lot of their sales are probably two
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  large repeat customers.
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  Ah, so the cost of acquiring that revenue is much lower. Exactly.
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  Once you've locked in a major client, the marketing spend to service that ongoing contract is minimal.
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  So it looks like very smart, deficient spending for this period.
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  Okay, fair enough. But I did see that their administrative expenses went up
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  a bit more, about 15%. What's behind that?
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  Right. So that increase was mostly driven by what looked like one-off strategic costs.
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  About $70,000 of it was for corporate expenses, tied to exercising things like
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  convertible loan notes and warrants. So basically, they were paying to clean
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  up their own financial structure. You got it.
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  And that kind of spending, while it hits the admin line, is really an investment
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  in their long-term stability.
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  The rest was just higher salaries, which you'd expect with this kind of growth.
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  And speaking of cleaning house, the drop in finance expenses is a huge win.
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  Oh, it's a phenomenal signal.
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  Finance costs fell by 39%. That's because of lower borrowing costs and also
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  because they reversed a late penalty interest provision. And every dollar you're
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  not paying in interest drops straight to the bottom line.
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  Directly. It's a huge contributor to that 3,702% profit jump we started with.
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  Okay, so that begs the question, where did all this profitable revenue actually
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  come from? Let's dive into the two key revenue drivers.
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  Yeah, the group seems to have these twin engines firing on all cylinders.
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  The first one is their ADR-related business. That stands for Advanced Digital Radio.
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  And that's the bigger piece of the pie right now. It is. It made up 57% of their
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  total sales in the first half of 2026, up from 50% the year before.
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  In dollar terms, it jumped from about $2.8 million to over $5 million.
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  And the report says it's gaining traction in its market, so that sounds sustainable. It does.
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  But while ADR is driving the numbers today, it's the other engine,
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  Space Connectivity, that I think gets the market really excited,
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  the SPC-related business.
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  Right. The long-term growth story. That's the one. It contributed 37% of the
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  total revenue, bringing in about $3.2 million.
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  And the key detail here is that deliveries are happening right on schedule with
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  their customers. So if you add ADR at 57 percent and SBC at 37 percent.
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  You've accounted for almost all their revenue.
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  It shows their focus on these two specialties is really paying off.
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  And geographically, where is this all happening? It's heavily concentrated in
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  the Asia-Pacific region.
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  That's their core market, contributing nearly 7 million of the total 8.75 million in revenue.
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  Interesting. So even though they're in a global business like space tech,
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  their customer base is still very regional. For now, yes.
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  It highlights where their expertise and network are strongest.
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  Okay, so this success on the income statement allowed them to make some massive
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  improvements elsewhere.
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  Let's talk about strengthening the balance sheet and managing debt.
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  This is where a good company becomes a great one.
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  They use that cash flow to dramatically de-risk the business. How so?
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  Total borrowings are down from about $4.5 million to $3.3 million.
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  But it's how they did it that's so impressive. They didn't just repay loans
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  with cash. They converted them, right?
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  The convertible loan notes and redeemable convertible bonds.
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  Exactly. They converted that debt into equity. Let's pause on that because it's
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  a really important move.
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  Why convert debt to equity, and what does it do for the company's risk profile?
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  Well, it all comes down to something called the gearing ratio.
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  It basically measures how much a company relies on debt versus its own equity.
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  And a high ratio is risky. Very risky.
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  AVT's gearing ratio was at a pretty elevated 55.8%. After these conversions,
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  it dropped all the way down to a much, much healthier 29.5%. Wow.
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  They almost have their debt risk in six months. They did. And for a high-growth
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  tech company, that's everything.
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  Debt demands fixed payments. Equity doesn't. This gives them immense financial
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  flexibility to invest in R&D and fulfill big orders.
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  And the fact that the lenders agreed to take shares instead of cash shows they
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  believe in the future of the company. It's a massive vote of confidence.
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  They issued over 111 million new shares to make it happen.
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  It's a powerful move that stabilizes the entire structure. You can see that
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  new health in their liquidity, too.
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  Working capital is up. Cash from operations surged. Yeah, cash from operations
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  went from about $1.1 million to $3.6 million.
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  They are now reliably generating cash from their actual business.
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  The report also mentioned a big jump in something called contract liabilities.
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  For listeners who aren't accountants, what does that tell us?
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  Contract liabilities are basically customer deposits or advanced payments for
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  orders that haven't been delivered yet. So it's future revenue they've already been paid for.
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  Exactly. And that number nearly doubled from $3.6 million to almost $6.8 million.
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  It's a huge leading indicator. It means customers are confident and placing
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  bigger orders for the future.
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  All of this feeds into the outlook, which looks incredibly positive.
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  Management seems confident they'll perform even better in the full year.
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  And that confidence isn't just talk. It's backed up by a very tangible order
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  book. What's the number?
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  As of September 30th, their confirmed order book stood at more than 18 million U.S.
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  Dollars. 18 million? That's more than double the revenue they just reported for the half year.
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  Right. And it's broken down pretty evenly. 8 million for ADR and 10 million for SPC.
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  They expect to fulfill most of that within the next 12 months.
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  Let's focus on that space connectivity piece, the SPC. That's where they make their boldest claims.
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  They call their IDRS service the world's first and only near-real-time data
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  solution for ILEO satellites.
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  It's a massive market to be tackling, and their expectations reflect that.
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  They said they expect to deliver significantly more terminals in the second
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  half of the year than they did in the first. That sounds like a big operational
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  challenge, a shift from winning contracts to actually scaling up manufacturing.
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  Absolutely. And with those terminals comes the really valuable part,
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  recurring airtime revenue.
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  They expect that to hit a new height based on all the new satellite launches
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  planned. They're not just selling hardware. They're selling long-term service contracts.
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  And just to round out the good news, there was a big non-financial milestone too. Yes.
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  The company is officially off
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  the SGX financial watch list. That's a huge reputational boost, isn't it?
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  It opens them up to a wider pool of investors.
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  A huge boost. It signals that they've
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  achieved financial credibility and stability. Okay, one last point.
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  With that massive profit jump, some people might wonder about a dividend.
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  But the company said no payout for now.
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  Right. And their reasoning is that they're still in the emerging phase from
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  being a loss-making company.
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  They see huge growth opportunities ahead. That $18 million order book.
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  And they need the capital to execute. So they're choosing long-term growth over
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  a short-term payout. It's a prudent choice.
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  They're reinvesting in the business to capture what they believe will be much
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  greater value down the line. Okay, let's pull this all together.
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  This has been a deep dive into a really compelling turnaround.
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  A 54% revenue surge powered by high margin sales in ADR and space connectivity.
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  A dramatic de-risking of the balance sheet with that gearing ratio tut almost
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  in half. And a very strong outlook, backed by an $18 million order book that
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  gives them clear visibility for the next year.
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  It really summarizes the new health of the company. But that brings up a really
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  important question for you, the listener, to think about.
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  Their whole strategy now hinges on delivering significantly more terminals in
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  the second half of the year. The finances are sorted.
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  The new challenge is purely operational.
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  They've been stocking up on materials, which is a good sign.
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  But can their supply chain and their manufacturing capacity actually scale fast
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  enough to handle that $10 million SPC backlog?
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  The financials are fixed, but now comes the true test of execution.
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  That's a fantastic thought to chew on as we watch AVT try to shift from a turnaround
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  story to a true growth powerhouse. Thanks for joining the Deep Dive.