EnGro Corporation Limited: 1H 2025 Financial Results Review

EnGro Corporation Limited has released its unaudited condensed interim financial statements for the half year ended 30 June 2025. The group operates primarily in the manufacture and sale of building materials, specialty polymers, and investment holding. Below, we analyze the key metrics, segment performance, and outlook as reported in the latest filings.

Key Financial Metrics

Performance Highlights

• Revenue Surge: Revenue rose 25% YoY to \$104.5 million, driven by robust sales in the Integral Cement and Ready-Mix Concrete (ICR) business in Singapore and Malaysia, and successful commissioning of new batching plants.
• Profit Spike: Net profit jumped from \$20,000 in 1H 2024 to \$8.7 million in 1H 2025, primarily due to a \$5 million unrealised fair value gain from venture capital investments and the absence of a \$1.5 million one-off JV disposal loss that impacted the prior period.
• EPS Growth: EPS soared to 7.29 cents, up from 0.36 cents YoY.
• Operating Cash Flow: Net cash from operating activities was \$12.9 million, up from a negative \$7.1 million the previous year, reflecting inventory reductions and higher trade payables.
• Strong Balance Sheet: Cash and cash equivalents remained robust at \$62.0 million, and net asset value per share climbed to \$2.16.
• Dividend Policy: No interim dividend was declared for 1H 2025, consistent with the previous year. The company maintains an annual dividend policy.

Segment Insights

• Cement and Building Materials: Continued growth in Singapore and Malaysia, with new plant investments and increased public sector construction demand.
• Specialty Polymer: Saw a revenue decline due to weaker automotive sector demand; the business is now focused on diversifying its customer base and product applications.
• Investments: Reported a significant fair value gain from venture capital funds, a reversal from prior year losses.
• China Operations: GGBS business in China continues to face challenges from a sluggish real estate and infrastructure market, with profitability expected to remain pressured.

Exceptional Items and One-Offs

• 1H 2025 benefited from a \$5.0 million unrealised gain in the fair value of venture capital investments, in sharp contrast to a \$2.4 million loss in 1H 2024.
• 1H 2024 results were dragged down by a \$1.5 million one-off loss from the disposal of a joint venture. This negative impact was absent in 1H 2025.
• Depreciation expenses for property, plant, and equipment increased sharply (+69.2% YoY), reflecting capital investments in truck fleets and plant setups.
• The group recorded net foreign exchange losses of \$1.2 million, compared to gains of \$1.1 million in the prior period.

Historical Performance and Trends

• The company’s earnings, revenue, and NAV per share have all shown marked improvement over the past year, despite ongoing volatility in the specialty polymer and China segments.
• Operating cash flows have recovered significantly compared to the negative outflow in 1H 2024.

Chairman’s Statement and Tone

“The outlook for the ICR business remains optimistic, driven by heightened construction activities in both Singapore and Malaysia. In Singapore, robust public sector demand is expected to fuel growth. In Malaysia, the investment in industrial and transport infrastructure projects are anticipated to bolster sales growth. However, increased competition coupled with delays in some project start dates may impact sales.

Our Specialty Polymer business is focused on diversifying its customer base and expanding product applications. Uncertainties arising from ongoing tariff disputes will continue to impact our sales to the automotive industry.

In China, the real estate and infrastructure sectors continue to experience a sluggish recovery, compounded by oversupply pressures. As a result, profitability of our China GGBS business is expected to remain challenged in the near term.”

The Chairman’s tone is cautiously optimistic for core markets in Singapore and Malaysia, but measured and realistic regarding challenges in China and the specialty polymer segment.

Divestments, Fundraising, and Corporate Actions

• No share buybacks, new placements, or sales of treasury shares reported.
• No fundraising, IPOs, or major asset sales during the period.
• Dividends: No interim dividend declared for 1H 2025, in line with the company’s policy of annual dividends.

Events and Risks Affecting the Business

• Macroeconomic risk: Delays in project starts and rising competition in construction materials could impact future revenue and margins.
• Industry risk: Ongoing tariff disputes are pressuring the specialty polymer segment, especially in automotive applications.
• Geographical risk: China operations remain weak due to property sector headwinds.
• No significant legal, tax, or environmental events disclosed.

Conclusion and Investment Recommendation

Overall Assessment: EnGro Corporation delivered a strong turnaround in 1H 2025, with robust revenue growth and an exceptional surge in net profit and EPS, largely driven by non-recurring gains from its venture capital investments and the absence of prior period losses. The core ICR business is well-positioned for further growth, while challenges persist in the specialty polymer and China segments. Cash flows and the balance sheet remain solid, but the lack of an interim dividend may disappoint some yield investors.

• If you are currently holding the stock: The fundamentals have improved, and the outlook for the main business in Singapore and Malaysia is optimistic. However, much of the profit gain was driven by non-operating items. Consider holding your position while monitoring for sustained core business improvement in upcoming quarters.
• If you are not currently holding the stock: The strong headline profit growth is encouraging, but investors should be aware that a significant portion of earnings was driven by fair value gains, which may not be recurring. Wait for confirmation of sustained growth in the operating businesses or a pullback in valuation before considering entry.

Disclaimer: This article is for informational purposes only and is not investment advice. Please consult with a professional financial advisor before making any investment decisions. The analysis is strictly based on the information provided in the company’s interim financial report.

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