King Wan Corporation (554) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 19.7% to S$92.4m, but attributable net loss was S$4.8m versus S$0.6m profit in FY2022, as sharply higher project costs compressed gross margin and one-off items and interest expense weighed on results.

• M&E engineering remained the main business, with S$163.3m of contracts on hand at year-end; the next 12 months were expected to remain challenging.

Financial highlights

• Revenue increased 19.7% to S$92.433m from S$77.192m; gross profit fell to S$0.455m from S$7.724m, with gross margin at 0.5% versus 10.0%.

• Loss before tax was S$5.601m versus profit before tax of S$0.548m; net loss attributable to owners was S$4.794m versus profit of S$0.605m.

• Adjusted for notable items, FY2023 included a S$1.0m settlement payout and S$1.047m contract-asset write-off; a S$2.352m reversal of loss allowances partly offset the impact.

• Operating cash flow was negative S$6.381m versus positive S$1.064m; cash and cash equivalents fell to S$11.0m from S$17.6m.

• Total comprehensive loss was S$7.004m versus income of S$3.019m, including a S$2.093m FVTOCI fair-value loss.

Outlook and guidance

• Singapore construction demand for 2023 was projected at S$27b–S$32b, with the public sector contributing an estimated 60%; BCA forecast annual demand of S$25b–S$32b for 2024–2027.

• M&E services were expected to remain challenging over the next 12 months; management cited secured order books as supporting a continuing income stream.

• Cost control, prudent financial management, human-capital development, productivity and workplace safety remained priorities amid potential business disruptions.

• No FY2023 dividend was recommended, reflecting the challenging outlook and higher financing and operating costs.