Beng Kuang Marine Maintains Profitability and Strengthens Balance Sheet in FY2025 Amid Challenging Market Conditions

Introduction

Beng Kuang Marine Limited (“Beng Kuang Group”) has released its results for the financial year ended 31 December 2025 (FY2025), demonstrating resilience and continued profitability despite a challenging operating environment marked by revenue and foreign exchange headwinds. The Group’s asset-light, service-oriented business model and disciplined financial management were key drivers in sustaining gross profit margins and maintaining a strong cash position.

Key Financial Highlights

• Revenue: S\$98.16 million, a 12.3% year-on-year decline from S\$111.88 million in FY2024, primarily due to timing delays in offshore asset integrity projects within the Infrastructure Engineering (IE) division.
• Gross Profit: S\$36.41 million, down 6.0% from S\$38.73 million, yet gross profit margin improved to 37.1% (up 2.5 percentage points from 34.6%).
• Net Profit: S\$12.53 million, a 40.9% drop from S\$21.19 million. Net profit attributable to equity holders was S\$5.33 million (compared to S\$11.54 million in FY2024, which included a one-off gain).
• EBITDA: S\$20.63 million, down 29.5% from S\$29.25 million.
• Operating Cash Flow: S\$26.55 million, reflecting robust cash conversion and disciplined working capital management.
• Balance Sheet: Cash and cash equivalents surged to S\$37.38 million. Total equity rose 26.9% to S\$36.14 million, with net asset value per share at 12.64 SG cents (up from 10.54 SG cents).
• Dividend: Proposed cash dividend of 0.6 SG cents per ordinary share, representing a payout ratio of 23.5% of net profit attributable to shareholders.

Business Performance and Division Highlights

Infrastructure Engineering (IE) Division

• Remains the main revenue driver, contributing 80% of total revenue.
• 76.22% of revenue from recurring asset integrity services under Asian Sealand Offshore Marine.
• Deck equipment supply saw a 27.8% revenue dip to S\$2.41 million due to project phasing, but the outlook is positive with S\$14.2 million in new contracts secured, particularly in India and Southeast Asia.
• New shipbuilding contracts worth S\$7.8 million secured, in line with the Group’s strategic focus to revive and scale this segment.
• Revenue timing delays were mainly the result of clients rescheduling project scope and work sequencing for optimization and asset life-extension. Importantly, the Group expects these deferred projects to be recognized in future periods, indicating a healthy pipeline and sustained demand.

Corrosion Prevention (CP) Division

• Revenue declined slightly by 4.0% to S\$19.63 million.
• Singapore operations benefited from higher-margin FPSO module works and offshore wind farm projects.
• Batam operations saw reduced revenue as several key projects ended and no major replacements occurred in the year.

Operational and Cost Management Highlights

• Gross profit margin improvement was driven by cost minimization, productivity enhancements, and the shift towards an asset-light operating model as part of the Group’s BKM 2.0 strategy.
• Administrative expenses were tightly controlled, decreasing 1.4% to S\$20.71 million, reflecting the Group’s focus on selective investment in talent and cost discipline.
• Finance costs fell 35.8% to S\$0.61 million due to continued deleveraging and prudent cash management, with the full redemption of corporate bonds.
• Other income dropped to S\$1.36 million (from S\$8.61 million), mainly due to the absence of a S\$5.51 million one-off gain from the partial disposal of Batam property in FY2024, a forex loss of S\$0.91 million, and a fair value loss of S\$0.17 million.

Strategic Initiatives: BKM 2.0

The Group’s “BKM 2.0” strategy is positioning Beng Kuang Marine as a more resilient, asset-light, and service-centric enterprise. The company is actively targeting high-growth segments of the global energy market, such as deck equipment, shipbuilding, and specialized industrial chemical cleaning—areas that are capital-light and complement its core capabilities.

The Group’s CEO, Mr. Yong Jiunn Run, emphasized the strategic importance of recurring, high-value services like asset life extension and regulatory compliance, which anchor the company’s recurring revenue and customer loyalty. The Group has supported integrity and life-extension works for over 20 offshore floating assets worldwide, highlighting robust relationships and barriers to entry for competitors.

Shareholder Considerations & Price-Sensitive Information

• Resilient Profitability: Despite a challenging year with revenue delays and forex losses, the Group maintained a strong cash position, improved margins, and sustained profitability—key positives for valuation.
• Dividend Declaration: The proposed dividend underscores management’s confidence in the Group’s cash flow and future outlook.
• Strong Balance Sheet: The full redemption of corporate bonds and significant increase in cash and equity improve the Group’s financial flexibility and may support future growth initiatives or higher dividend payouts.
• Project Pipeline Visibility: Deferred asset integrity projects are expected to be recognized in upcoming periods, providing earnings visibility and potential positive surprises in future results.
• New Contract Wins: The S\$14.2 million in new deck equipment contracts and S\$7.8 million in shipbuilding contracts position the Group for growth in 2026 and beyond.
• Risks: Absence of one-off gains, forex losses, and fair value losses affected net profit; shareholders should monitor ongoing cost discipline and execution of deferred projects.

Conclusion

Beng Kuang Marine’s FY2025 performance demonstrates resilience and a well-capitalized balance sheet, despite short-term revenue challenges. The Group’s asset-light strategy, strong project pipeline, and disciplined financial management position it well for future growth. The announcement of a dividend and strengthened equity capital base are shareholder-friendly signals that could be price sensitive. Investors should closely watch the recognition of deferred revenue and execution of the BKM 2.0 strategy, as these could provide catalysts for share price movement in the coming year.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult their financial advisor before making investment decisions. The author and publisher do not hold any responsibility for investment actions taken based on this report.

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