Koh Brothers Eco Engineering Limited: FY2025 Financial Analysis & Outlook

Koh Brothers Eco Engineering Limited (“KBE”) released its condensed consolidated interim financial statements for the full year ended December 31, 2025. The report reveals a dramatic turnaround in profitability, a robust increase in revenues, and continued progress in both core business segments. This article provides a detailed, investor-focused analysis of the company’s latest financial results, segment performance, cash flows, dividend declaration, and outlook.

Key Financial Metrics & Comparative Performance

Historical Performance & Trends

KBE delivered a substantial recovery in FY2025, rebounding from a net loss of \$14.3m in FY2024 to a net profit of \$9.9m. The turnaround was driven by a 65% YoY revenue increase, primarily from new projects in the Engineering and Construction segment. Gross profit margin improved markedly, reflecting better project mix and cost allocation efficiencies. The company also declared a final dividend of 0.03 cents per share, marking a return to shareholder distributions after no dividend the previous year.

Segment Analysis

• Engineering and Construction: Revenue surged from \$81.4m to \$181.5m, with segment results swinging from a \$20.2m loss to a \$1.8m profit, driven by new project awards and robust construction activity.
• Bio-Refinery and Renewable Energy: Revenue dipped slightly (from \$67.6m to \$64.4m) due to completion of major projects, but segment profit increased from \$10.7m to \$12.1m, indicating improved margin and execution.

Exceptional Items & Expenses

• Foreign Exchange Loss: Net other (losses)/gains turned negative (\$2.38m loss in FY2025 vs \$1.01m gain in FY2024), mainly due to unrealized FX losses from the Bio-Refinery segment, linked to USD/MYR movement.
• Administrative & Selling Expenses: Both categories decreased YoY, reflecting improved project utilization and cost discipline.
• Finance Expenses: Down 38% YoY, due to lower borrowings and interest costs.

Cash Flow & Balance Sheet

• Operating Cash Flow: Net cash inflow of \$22.98m in FY2025, reversing a \$13.73m outflow in FY2024. This was aided by higher trade payables and improved working capital management.
• Cash & Bank Balances: Increased to \$71.78m (vs \$58.61m in FY2024).
• Net Asset Value: Rose to \$120.46m for shareholders, up from \$112.55m.
• Order Book: Stood at \$1.13 billion, providing visibility for future revenues.

Dividend Declaration

• Final Dividend: 0.03 cents per share, tax-exempt (one-tier), payable date to be announced.
• Comparison: No dividend was declared for FY2024.

Legal & Contingent Liabilities

• A subsidiary is engaged in arbitration over disputed claims (\$37.8m claimed; \$37.1m counter-claimed). The dispute remains unresolved, with a hearing scheduled in 2026. No provision for these claims was made, based on legal advice.

Related Party Transactions & Corporate Actions

• Significant ongoing related-party transactions, especially construction contracts and purchase/sale of goods/services, with values disclosed in the report.
• No share buybacks, placements, or treasury shares; issuance of new shares was limited to performance share plan vestings.

Business Outlook & Chairman’s Statement

The Group expects construction demand in Singapore to remain stable in 2026 (\$47-53 billion), supported by major public projects. The outlook is positive but competitive, with labor constraints and cost pressures. KBE will maintain a prudent approach, focus on cost recovery, and enhance operational efficiency.

In the Bio-Refinery and Renewable Energy segment, global sustainability trends and demand for fats, oils, and Sustainable Aviation Fuel (SAF) support optimism. The Group has delivered ISCC-compliant plants and remains well positioned for future opportunities, despite near-term volatility and geopolitical risks.

The Chairman states: “The Group remains cautiously optimistic on its overall outlook and long-term growth prospects, supported by continued innovation and selective evaluation of strategic joint venture opportunities aligned with its sustainability objectives. As at 31 December 2025, the Group’s order book stood at \$1.13 billion and the Group remains focused on the execution of its order book.”

Conclusion & Investment Recommendations

Overall, KBE’s performance in FY2025 is strong. The company has delivered a robust recovery in revenue and profit, improved cash flow, and reinstated dividends. The outlook is positive, with a healthy order book and exposure to growth trends in both construction and renewable energy. Risks include ongoing legal disputes, FX volatility, and competitive pressures, but management’s prudent strategy and operational improvements are encouraging.

• If you are already holding KBE shares: Consider maintaining your position. The company’s turnaround, strong order book, and reinstated dividend suggest further upside potential, supported by sector tailwinds and disciplined execution. Monitor the legal dispute and FX risks closely.
• If you are not currently holding KBE shares: It may be worthwhile to initiate a position, especially if you seek exposure to Singapore infrastructure and global renewable energy markets. However, be aware of ongoing legal risks and sector volatility; consider building your position gradually as the company continues to deliver results.

Disclaimer: This article is for informational purposes only. It is not investment advice. Please conduct your own research and consult with a licensed financial advisor before making any investment decisions. The recommendations above are based solely on the company’s disclosed financial results and outlook.

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