Koyo International Limited HY2025: Financial Analysis & Investment Perspective

Koyo International Limited, a Catalist-listed Singapore-based provider of integrated mechanical and electrical engineering services, has released its unaudited interim financial statements for the six months ended 30 June 2025. Below, we break down the results, key trends, and investment implications for current and potential shareholders.

Key Financial Metrics

Historical Performance Trends

• Revenue: Rose substantially by 23.5% YoY, driven primarily by progression of ongoing mechanical engineering projects.
• Gross Profit: Decreased by 5.4% YoY despite higher revenue, indicating margin compression due to cost inflation.
• Net Profit: Jumped nearly fivefold, mainly from operating leverage and cost management, though profit remains modest compared to revenue.
• EPS: Sharply higher at 0.15 cents (HY2025) vs 0.03 cents (HY2024).
• Gross Profit Margin: Fell from 19.7% (HY2024) to 15.1% (HY2025), reflecting rising input costs.

Segment Analysis

• Mechanical Engineering: Contributed 91.1% of revenue, up 25.5% YoY. Gross profit margin declined to 12.7% from 16.3%.
• Facilities Management: Revenue up 8.2% YoY; gross profit margin dropped sharply from 45.5% to 39.7%.
• Electrical Engineering & Investment Holding: No meaningful revenue in HY2025 due to lack of new contracts and asset disposals.

Cash Flow & Balance Sheet

• Operating Cash Flow: Strong turnaround with positive S\$4.5 million (HY2025) vs negative S\$2.0 million (HY2024), reflecting improved collection and project delivery.
• Investing Activities: Minimal outflows, mainly due to ongoing equipment upgrades.
• Financing Activities: Net outflow of S\$0.2 million, mainly interest and lease repayments. Bank borrowings stable at S\$4.0 million.
• Cash & Cash Equivalents: Increased to S\$6.0 million from S\$5.3 million a year ago.
• Net Asset Value: Edged up to S\$19.9 million (10.50 cents/share).

Related Party Transactions & Directors’ Remuneration

• Directors’ & Key Management Remuneration: S\$1.42 million in HY2025, up slightly from S\$1.35 million in HY2024.
• Related Party Loans: Aggregate interest paid in HY2025 totaled S\$156,000, mainly for bridging and working capital loans extended by directors and related parties.

Corporate Actions

• Share Buybacks: No buybacks or changes. Treasury shares held steady at 6.3 million (3.3% of issued shares).
• Divestments: No new asset sales during HY2025. Investment holding revenue absent following previous disposal of quoted securities.
• Fundraising: No new equity raised; bank borrowings unchanged.

Events Impacting the Business

• Macroeconomics: Management expects the construction industry to remain challenging, citing ongoing supply chain disruptions and inflationary pressures.
• No Dividends: No dividend declared for HY2025 to conserve cash for future projects.
• Contract Pipeline: S\$160.5 million worth of contracts on hand, with completion dates through 2029—providing some visibility but also long-term execution risk.

Chairman’s Statement

“The Group continues to face uncertainties and challenges resulting from uncertain operating environment impact by continued supply chain disruptions and inflationary pressures. Notwithstanding the above, the Group will cautiously monitor and take necessary steps to mitigate the impact of an uncertain operating environment on the Group’s operations.”
Tone: Neutral to cautious; highlights operational difficulties yet affirms commitment to risk management.

Conclusion & Investment Recommendations

Overall Assessment:
Koyo International delivered robust revenue growth and a sharp rebound in net profit for HY2025, albeit with significant margin compression and ongoing cost pressures. The company maintains a healthy contract pipeline and improved cash flow, but faces a tough industry environment, limited segment diversification, and has opted to conserve cash by withholding dividends.

• If you currently hold Koyo International shares:
  Consider holding your position if you are comfortable with cyclical exposure and management’s cautious approach. The strong contract pipeline and improved operating cash flow support longer-term recovery, but watch for further margin erosion and industry headwinds.
• If you do not currently hold Koyo shares:
  Wait for clearer signs of sustainable margin recovery and sector stabilization. Entry may be considered if cost pressures ease, segment diversification improves, or dividend policy resumes.

Disclaimer: The above analysis and recommendations are based strictly on the company’s published financial results and disclosures for HY2025. They do not constitute investment advice. Investors should conduct their own due diligence and consider their risk appetite before making any investment decisions.

View Koyo Intl Historical chart here