Mun Siong Engineering (MF6) H1 2023 earnings summary

Executive summary

• H1 revenue rose 9.8% YoY to $33.6m, but gross profit fell 76.1% to $0.6m and net loss widened to $2.9m.

• Results were pressured by higher labour, subcontracting and dormitory costs, pending agreement on completed-work contract values, and start-up losses in the US.

Financial highlights

• Revenue was $33.587m vs $30.592m; cost of sales increased 18.1% to $32.938m, reducing gross profit to $0.649m from $2.711m.

• Gross margin was 1.9% vs 8.9%; operating loss was $2.738m vs $1.072m, and loss before tax was $2.738m vs $1.090m.

• Net loss was $2.867m vs $1.420m; basic and diluted EPS were both -S$0.49 cent vs -S$0.24 cent.

• Other income and recoveries rose to $1.136m from $0.295m, mainly on higher scrap sales, grants and rental income.

Outlook and guidance

• A major Singapore customer deferred investments; surplus direct workforce is to be redeployed, with fuller deployment important to margin recovery.

• Revised rates for one major maintenance-contract partner took effect 1 July 2023; negotiations with other partners are ongoing.

• The Johor fabrication yard is expected to be occupied by end-2023; US operations are pursuing work orders after pre-qualification by six plants.

• Committed capital expenditure pending payment was $2.5m at 30 June 2023; delayed contract-asset conversion or slower collections could require credit facilities and erode profitability.