Mun Siong Engineering Limited – 1H2025 Financial Review

Mun Siong Engineering Limited, a Singapore-listed provider of mechanical and electrical engineering services to process industries, released its condensed interim results for the six months ended 30 June 2025. The following analysis summarizes the Group’s performance, key financial metrics, segment breakdowns, and outlook as disclosed in the report.

Key Financial Metrics and YoY Comparisons

*Note: The report does not provide data for 2H 2024 or the previous quarter, so only year-end 2024 figures are shown for NAV as a proxy for QoQ comparison.

Segment and Geographic Performance

• Singapore: Revenue grew by 12.2% YoY to \$23.6m, driven by increased work volume and higher productivity. Gross profit and margins improved due to better efficiency.
• Malaysia: Revenue declined by 7.8% YoY to \$3.7m, reflecting the absence of shutdown activities at the Pengerang Facilities and gradual reduction in work volume. The segment swung to a gross loss, with costs recognized ahead of revenue due to billing cycle timing.
• Taiwan: Revenue up 58.4% YoY to \$1.06m, shifting from a gross loss in 1H2024 to a gross profit in 1H2025 on higher workload.
• United States: Revenue fell 26.4% YoY to \$3.37m, primarily due to the absence of high-value turnaround projects. The segment posted a gross loss, with margin pressures exacerbated by unexpected tariff costs and project mix changes.

Exceptional Items and Significant Expenses

• Gross Profit Collapse: Despite higher revenue, gross profit dropped 78.5% due to increased subcontractor and manpower costs (especially in Singapore), unfavorable US project economics, and tariff-related issues.
• Other Income and Recoveries: Up 209.2% YoY, mainly due to gain on disposal of fixed assets and medical claim recoveries.
• Other Operating Expenses: Swung from a gain in 1H2024 to a \$0.78m loss in 1H2025, driven by \$0.7m in foreign exchange losses from SGD strengthening against USD, mostly unrealized.
• Finance Costs: Increased 41.9% due to new interest expenses on shareholder loans and invoice financing.

Cash Flow and Liquidity

• Operating cash flow remained positive at \$1.6m, despite the operating loss, with significant working capital movements.
• Net investing cash inflow of \$0.3m, primarily from asset disposals.
• Net financing cash outflow of \$3.5m, reflecting significant loan repayments.
• Overall, cash balances fell by \$0.9m to \$9.4m at end-June 2025.
• Debt to equity ratio improved to 9.3% from 16.0% at end-2024, following repayments of bridging loans and invoice financing.

Asset Valuation and Impairments

• No new fair value assessment was conducted for investment properties in 1H2025; management judged no change since the last independent valuation in Dec 2024.
• No impairment of property, plant and equipment was recognized, despite market capitalization being below net assets. Management’s value-in-use assessment found no write-down was necessary.

Dividends

• No dividends were declared or recommended for the period. The Board explicitly stated that financial resources will be prioritized for performance improvement and business obligations.

Related Party Transactions and Share Capital

• Outstanding loans of \$1.8m from the Executive Chairlady/Controlling Shareholder, with interest rates below prevailing market rates. No repayments were made and the lender expressed willingness to roll over the loans.
• No share buybacks or new shares issued in the period. Treasury shares remain minimal.

Macroeconomic and Industry Outlook

Plant owners are adjusting maintenance schedules and asset portfolios in response to oil price fluctuations, resulting in a more selective project environment. Competition among maintenance service providers has intensified, with margin pressure on smaller-scale projects. Singapore operations will continue balancing direct labor and subcontractor use to maintain flexibility and control costs. The Pengerang Facilities in Malaysia are undergoing a Creditors Reliability Test, which may lead to increased work volume but currently limits activity.

In the US, Mun Siong’s successful 2024 turnaround projects have opened discussions with new clients for small-scale diagnostic projects, but additional compliance and technical expenditures are expected in the near term.

Net working capital has stabilized after a period of decline, with shareholder loans providing liquidity flexibility. Foreign currency exposure remains a risk, particularly with further SGD strengthening possible.

Chairman’s Statement and Management Tone

The Board’s commentary is cautious and pragmatic. While the Group is focused on strengthening operations and liquidity, management acknowledges ongoing challenges: “The market for maintenance service providers has become increasingly competitive. With fewer sizable projects… existing players are now contending aggressively for smaller-scale work, leading to further margin pressures and the need for enhanced productivity efficiency.” There is no immediate optimism for a turnaround, and no dividend is proposed, emphasizing capital preservation and operational discipline.

Conclusion: Assessment of Financial Performance and Outlook

Mun Siong Engineering’s 1H2025 results reflect a weak performance, with widening net losses, a sharp drop in gross profit despite revenue growth, and ongoing margin compression across key markets. Exceptional costs, particularly in the US, and FX losses have further eroded profitability. Liquidity remains manageable, aided by shareholder loans and working capital discipline, but the outlook remains challenging due to competitive pressures, project scarcity, and macroeconomic uncertainties.

The Group’s outlook is neutral-to-weak: while management is actively pursuing efficiency improvements and new business opportunities, the near-term environment offers little visibility for a sustained recovery. Investors should expect continued volatility and margin pressure in the coming quarters.

View Mun Siong Engg Historical chart here