Vallianz Holdings Limited 1H 2025 Financial Review: Navigating Headwinds, Seizing Opportunities

Vallianz Holdings Limited, a Singapore-listed provider of offshore marine services, released its unaudited interim results for the six months ended 30 June 2025 (“1HFY2025”). The report reveals a challenging but resilient performance amid volatile macroeconomic conditions, industry-specific headwinds, and ongoing restructuring efforts. Below, we break down the key financial metrics, historical trends, exceptional items, and other critical disclosures investors should note.

Key Financial Metrics and Performance Table

Historical Performance Trends

• Revenue: Fell sharply by 24% YoY due mainly to a reduced order book and fewer ongoing projects in the Shipyard and Newbuild Management Services segment. Vessel Chartering and Management saw improvement due to fleet expansion and higher charter rates.
• Gross Profit: Dropped 39% YoY as both main segments reported lower gross profits. Notably, Vessel Chartering and Management gross margin declined to 15.0% (from 38.5%) due to higher operating and maintenance costs and lower utilization of submersible launch barges. Shipyard segment margin remained stable at 2.3%.
• Net Profit: Despite lower revenue and gross profit, net profit more than doubled YoY, mainly due to significant gains on disposal of plant and equipment (US\$3.9m) and favorable foreign exchange movements (US\$3.2m).
• EPS: Increased by 46% YoY, reflecting improved profitability attributable to shareholders.
• No Dividends: No interim or final dividend was declared for the period, consistent with the prior year.

Exceptional Items and Non-Recurring Events

• Other Income: Rose substantially due to a gain on disposal of plant/equipment and net foreign exchange gain, both non-recurring items.
• Asset Disposal: The company completed the sale of a vessel classified as an asset held for sale at the end of 2024, realizing net cash of US\$0.95m.
• Related-Party Transactions: Significant transactions with controlling shareholder (RHC Group), including interest on shareholder advances (US\$3.69m) and shipbuilding/chartering services, all conducted under approved mandates.
• Financial Asset Write-Off: Post-30 June 2025, the company wrote off its unquoted preference shares in ROPL due to the disposal of the underlying vessel.
• Debt Restructuring: Obtained in-principle approval to restructure a term loan, settling for US\$4m over several years in full and final settlement.

Balance Sheet, Cash Flow & Liquidity

• Net Current Liabilities: US\$15.2m as at 30 June 2025, reflecting ongoing liquidity strain.
• Total Borrowings: US\$114.9m, with US\$28.0m current and the rest long-term. The company breached loan covenants at year-end 2024, but received waivers until 31 December 2025.
• Cash Flow: Net cash from operations was US\$6.6m. Investing activities generated US\$8.4m (primarily from asset sales), while financing activities saw an outflow of US\$15.3m due to lease and loan repayments.
• Going Concern: The company remains reliant on continued support from its controlling shareholder and lender waivers to maintain going concern status.

Macroeconomic and Industry Trends

• OSV Market: The offshore support vessel (OSV) sector remains robust, though the Clarksons Offshore Index is off its mid-2024 peak, and the market is expected to grow at a CAGR of 6.8% to US\$39bn by 2029.
• Sector Demand: Offshore oil and gas capex is rising, driving OSV demand, particularly in the “golden triangle” (Brazil, West Africa, Middle East). However, shipyard capacity is constrained, with newbuild slots largely filled through 2026–2027.
• Risks: Geopolitical tensions, rising operating and financing costs, and potential disruptions in the Middle East present ongoing challenges.

Corporate Actions and Other Notable Events

• No Share Buybacks, Placements, or Dilution: No movements in share capital, treasury shares, or convertibles.
• Subsidiary Strike-Off: PTSB Holdings Pte. Ltd. was struck off during the period.

Chairman’s Statement

“Looking ahead, the global business environment continues to be shaped by geopolitical tensions, evolving trade dynamics, and elevated operating costs…the offshore support vessel (‘OSV’) markets have remained robust…Despite the generally positive market fundamentals, the Group remains cautious amid rising operating costs, higher financing expenses, and potential geopolitical disruptions, especially in the Middle East. The Group continues to focus on its core strengths in newbuild and chartering and work on opportunities to invest in advanced, environmentally friendly vessels to meet regulatory requirements and client needs. With a strong presence in Southeast Asia and the Middle East, the Group is well-positioned to capture regional growth opportunities while actively pursuing renewable energy and decarbonisation initiatives to support its long-term strategic objectives and enhance competitiveness.”

Tone: The statement is cautiously optimistic, acknowledging both the sector’s growth potential and the significant risks ahead.

Conclusion & Investment Recommendation

Overall Assessment: Vallianz Holdings delivered a resilient net profit and EPS growth despite severe revenue and gross profit declines, supported by one-off gains and foreign exchange movements. The company is navigating liquidity constraints, lender covenant breaches (with waivers), and a challenging operating environment, yet remains positioned to benefit from sector upturns in OSV demand.

• If You Currently Hold the Stock: Consider maintaining your position if you are comfortable with significant risk and potential volatility. The company’s reliance on non-recurring gains and ongoing support from its controlling shareholder are red flags, but the strategic sector positioning and successful debt restructuring provide some upside if the OSV market continues to recover. Remain vigilant for updates on liquidity, covenant status, and core operational profitability.
• If You Do Not Currently Hold the Stock: Caution is warranted. Wait for more evidence of sustainable, recurring profit growth and/or a material strengthening of the balance sheet before considering an entry. The current positive net profit is not underpinned by improving core earnings quality, and liquidity risks remain.

Disclaimer: This analysis is based strictly on the company’s published interim financial report and does not constitute investment advice. All investments carry risk, and investors should conduct their own due diligence or consult a professional advisor before making any investment decisions.

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