Beng Kuang Marine (BEZ) H1 2023 earnings summary

Executive summary

• Returned to profitability in 1H2023 continuing operations, with revenue up 9.7% YoY to S$31.86m, gross profit up 62.5% to S$8.39m and pretax profit of S$1.19m versus a S$0.49m loss.

• Asset monetisation and resilient Infrastructure Engineering (IE) and Corrosion Prevention (CP) performance advanced the shift toward an asset-light, service-oriented model.

Financial highlights

• Continuing-operations cost of sales fell 1.7% to S$23.47m; gross margin improved to 26.3% from 17.8%.

• Net profit from continuing operations was S$0.51m versus a S$0.98m loss; loss attributable to equity holders was S$0.85m, with higher interest and one-off Cattle Line Two legal and consultancy costs cited.

• Reported EBITDA was S$3.82m versus S$5.23m; adjusted EBITDA, excluding other gains, rose 91.6% to S$3.66m from S$1.91m.

• Other gains declined to S$0.17m from S$1.04m, reflecting currency translation losses and lower government grants; continuing-operations depreciation fell to S$1.69m from S$3.67m.

Outlook and guidance

• Focus remains on developing core IE and CP, streamlining operations around these divisions, and pursuing emerging marine and offshore opportunities to sustain positive FY2023 momentum.

• An asset-light, service-oriented model, fixed-asset monetisation and deleveraging remain strategic priorities; lower depreciation is expected following partial land sales and asset disposals.

• Secured orders, recurring work and uncompleted performance obligations are expected to support positive operating cash flows; tenders and cost rationalisation are intended to bolster cash generation.