Beng Kuang Marine is making waves in the offshore and marine industry, emerging as one of 2024’s standout gainers. Its stock surged an impressive 283.3% over the past year, reaching 22 cents as of Jan 17 and giving the company a market capitalization of $45.8 million. This dramatic turnaround is credited to a sweeping business overhaul led by its new CEO, Yong Jiunn Run.
Reshaping the Company for the Future
Listed in 2004 during a booming market cycle, Beng Kuang Marine faced turbulent waters in the years that followed. Struggling under a capital-intensive model, the company was slow to recover compared to its peers. However, Yong, a former CIMB banker, has ushered in a new era by pivoting to an asset-light model.
Under his leadership, the company shed unprofitable ventures like ship chartering, hardware distribution, and bottled water supply. These bold moves have not only streamlined operations but also facilitated Beng Kuang’s removal from the SGX Watchlist, positioning it for future growth.
“Several businesses, such as the livestock carrier segment, were bleeding resources and couldn’t create market value,” Yong explained in an interview. “The shift to an asset-light model makes us more nimble and resilient to market fluctuations.”
Optimism with a Cautious Eye
Despite the positive momentum, Yong is taking a prudent approach. “While we’re optimistic, sustainability is not guaranteed. We must innovate and develop new revenue streams while remaining capex-light,” he said. The company plans to focus on its infrastructure engineering division, anchored by its Batam yard, as it pivots towards service-oriented solutions.
This adaptability ensures that Beng Kuang can respond quickly to industry downturns, avoiding the pitfalls of previous crises, such as the pandemic and oil and gas slumps.
Injecting Fresh Leadership
In a move to inject new energy, Beng Kuang appointed 28-year-old Dylan Chua as CEO of its corrosion prevention division. The younger Chua, part of the company’s founding family, is expected to bring innovative ideas to one of the firm’s key business units.
Financial Turnaround
Signs of recovery began to emerge in FY2023, with Beng Kuang posting a $3.4 million profit—an impressive rebound from an $8.6 million loss the previous year. The company carried this momentum into FY2024, reporting a 25% year-on-year increase in revenue to $26.8 million for its third quarter. Profit before tax (PBT) grew by 27% year-on-year to $3.79 million.
The company’s infrastructure engineering segment, buoyed by strong demand for asset integrity solutions in both offshore and onshore markets, played a pivotal role in this growth.
Analysts Back the Comeback
Jarick Seet of Maybank Securities has a “buy” recommendation for Beng Kuang, with a slightly revised target price of 27 cents. While noting that dry-docking activities temporarily impacted the company’s PBT growth, Seet praised the resilience of its infrastructure engineering segment and highlighted the turnaround in its corrosion prevention business.
The latter, which had been loss-making, is now expected to post a modest profit in FY2024 and deliver earnings of $2 million to $2.5 million in FY2025.
A Bright Horizon
Beng Kuang Marine’s transformation story is one of resilience, strategic vision, and adaptability. With its new asset-light model, fresh leadership, and a focus on growth-oriented business units, the company is well-positioned to ride the ongoing rebound in the offshore and marine industry.
As it navigates new waters, Beng Kuang Marine is proving that even the most troubled companies can chart a successful course toward renewed prosperity.
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