Kim Heng Limited: 1H2025 Financial Results Analysis
Kim Heng Limited released its interim financial statements for the six months ended 30 June 2025. The report highlights a period of both growth and operational shifts, with clear changes in revenue composition and profitability. Below, we analyze the key financial metrics, performance trends, and corporate developments disclosed in the report.
Key Financial Metrics and Performance Comparison
| Metric |
1H2025 (Current) |
2H2024 (Prev. Half) |
1H2024 (Same Period Last Year) |
YoY Change |
QoQ Change |
| Revenue (S\$’000) |
67,073 |
55,502* |
55,502 |
+21% |
+21% |
| Gross Profit (S\$’000) |
15,180 |
15,372* |
15,372 |
-1% |
-1% |
| Gross Profit Margin |
23% |
28%* |
28% |
-5pp |
-5pp |
| Net Profit (S\$’000) |
1,297 |
428* |
428 |
+203% |
+203% |
| EPS (Basic, cents) |
0.1 |
(0.1)* |
(0.1) |
+0.2 |
+0.2 |
| Proposed Dividend |
None |
None |
None |
No Change |
No Change |
*No interim or previous quarter/half detailed; only annual and half-year comparisons provided in the report.
Historical Performance Trends
- Revenue Growth: 1H2025 revenue rose by 21% year-over-year, driven by increased contributions from vessel trading (+S\$6.7M), shipbuilding contracts (+S\$6.5M), and material sales (+S\$3.9M). This was partly offset by declines in chartering/towage and marine support services.
- Profitability: Net profit more than tripled (+203% YoY) despite a near-flat gross profit, reflecting lower administrative expenses and higher other income.
- Margins: Gross profit margin dropped 5 percentage points to 23%, impacted by lower margins in material sales, chartering/towage, and equipment rental.
- EBITDA: EBITDA increased by 31% to S\$8.8M in 1H2025, from S\$6.7M in 1H2024.
Balance Sheet and Cash Flow
- Assets: Non-current assets increased by S\$10.6M, largely due to new investments in property, plant, and equipment.
- Current Assets: Decreased by S\$4.6M, mainly from reductions in inventories and receivables, offset by higher contract assets and cash.
- Liabilities: Non-current liabilities rose by S\$3.9M due to additional loans; current liabilities increased by S\$1.8M, primarily from higher payables.
- Cash Flow: Operating cash flow was strong at S\$20.2M, up from S\$7.0M in 1H2024. Investing activities consumed S\$14.6M (mainly capex), and financing activities used S\$3.0M (loan/lease repayments).
Corporate Actions and Other Notable Events
- Dividend: No interim dividend declared for 1H2025, in line with the previous period. The board stated the intention to conserve cash for working capital and expansion.
- Treasury Shares: No new buybacks in 1H2025, with 0.72% of shares held as treasury shares. No outstanding options or convertibles exist.
- Related-Party Transactions: Interest expenses paid to the Executive Chairman and CEO (Mr. Thomas Tan Keng Siong) totaled S\$129,000 for temporary advances at 7.5% p.a.
- Loan Covenant Breach: The Group breached a loan covenant but received an indulgence letter from the lender, mitigating immediate risk.
- Industry Expansion: The Group expanded its renewable energy business by deploying a geotechnical vessel to an offshore windfarm project in Korea, aiming to boost its submarine cable installation capabilities.
- No Divestments, IPOs, or Asset Sales: No major corporate actions such as divestments or IPOs were disclosed for the period.
Chairman’s Statement and Outlook
“The group had taken a further step in 1H2025 in its journey towards renewable energy by deploying the newly reactivated geotechnical vessel to an offshore windfarm project in Korea. We look forward to enhance our submarine optic and power cables installation capabilities. While demand for offshore and marine vessels remains robust, we shall be vigilant of any unexpected shifts in this volatile general macro environment affected by ongoing tariffs worldwide.”
The tone is cautiously optimistic, highlighting expansion into renewables and ongoing robust demand, but also warning of macroeconomic volatility and tariffs.
Conclusion and Investment Recommendation
Overall, Kim Heng Limited delivered strong revenue and profit growth in 1H2025, with healthy operating cash flows and progress in its renewable energy strategy. However, margin compression, ongoing loan covenant monitoring, and macroeconomic uncertainties remain key risks.
- If you currently hold this stock: Consider maintaining your position, as the company is generating positive cash flows, expanding new business lines, and managing liabilities. However, monitor margin trends and macro risks, and be alert to future dividend reinstatement or further asset expansion.
- If you do not hold this stock: Consider waiting for further clarity on margins and covenant compliance before initiating a position. The renewable energy pivot and strong operating cash flow are positives, but lack of dividends and volatile industry conditions warrant caution.
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consider their own financial circumstances before making any investment decisions.
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