Koyo International Limited FY2025 Financial Review: Strong Revenue Surge but Margin Pressures Persist

Koyo International Limited, a Singapore-listed provider of integrated mechanical and electrical engineering services, has released its unaudited condensed interim financial statements for the full year ended 31 December 2025. The results show a dramatic increase in revenue and net profit, primarily driven by the mechanical engineering segment. However, the company also experienced margin compression due to inflationary pressures and higher costs. Below, we break down the key metrics, trends, and notable developments from the report.

Key Financial Metrics

Historical Performance and Segment Trends

Koyo delivered a substantial turnaround in FY2025, with revenue up 151.3% year-over-year and net profit swinging from S\$58,000 in FY2024 to S\$3.3 million in FY2025. The second half of 2025 saw particularly strong performance, both in absolute terms and in comparison to the prior periods. This growth was almost entirely attributable to the mechanical engineering segment, which saw a S\$71.8 million jump in revenue, reflecting the completion of a major project at peak operation.

However, while topline and bottom-line growth were robust, gross profit margins declined sharply from 20.9% in FY2024 to 12.0% in FY2025. This was due to market inflation, increased foreign worker levies, and higher costs of sales, especially in the mechanical engineering and facilities management segments.

Dividends

No dividend has been declared or recommended for FY2025, consistent with the prior year. The company has stated a desire to conserve cash for ongoing projects.

Directors’ Remuneration

Total remuneration to directors and key management personnel amounted to S\$1.47 million in FY2025, up from S\$1.04 million in FY2024. Core compensation includes directors’ fees, salaries, short-term benefits, and Central Provident Fund contributions.

Balance Sheet and Cash Flow Review

Total assets increased to S\$84.0 million, mainly driven by higher trade receivables and contract assets due to the group’s expanded business activities. Cash and bank balances surged to S\$18.6 million, up from S\$2.8 million at the prior year-end, reflecting strong cash generation from operations. On the liability side, trade and other payables rose sharply as a result of higher supplier purchases and accrued subcontractor costs. Bank borrowings and lease liabilities declined due to repayments.

Related Party Transactions and Unusual Fund Flows

The report discloses several interested person transactions (IPTs), including bridging and working capital loans from directors and related parties, aggregating S\$278,000 in interest for FY2025. The group does not have a general mandate for IPTs.

Share Capital and Buybacks

There were no changes to share capital or treasury shares during the year. The company holds 6.3 million treasury shares, representing 3.3% of outstanding shares. No convertibles or subsidiary holdings were reported.

Exceptional Items and Asset Valuation

No significant exceptional items or asset revaluations occurred in FY2025. The group’s leasehold property was last revalued as of 31 December 2024, with no further revaluation in FY2025.

Outlook and Chairman’s Statement

No explicit Chairman’s Statement was provided in the report. However, management commentary notes that the group has S\$76.6 million in outstanding contracts through 2029. The tone is cautious, acknowledging “uncertainties and challenges resulting from an uncertain operating environment impacted by continued supply chain disruptions and inflationary pressures,” and stating that the group “will cautiously monitor and take necessary steps to mitigate the impact of the uncertain operating environment on the Group’s operations.”

Conclusion and Investment Recommendations

Overall, Koyo International Limited’s FY2025 performance was strong on revenue and profit growth, but the quality of earnings is tempered by shrinking margins, inflationary cost pressures, and ongoing macroeconomic risks. The group’s cash and order book position are solid, but no dividend has been declared, and management’s outlook is cautious.

For Current Shareholders

• If you are already holding the stock, consider maintaining your position but closely monitor future margin trends and management’s ability to convert the robust order book into profitable revenue. The sharp increase in revenue and cash flows is encouraging, but persistent margin pressure and inflation risks warrant caution. Watch for any signs of project delays, cost overruns, or working capital issues in subsequent quarters.

For Potential Investors

• If you do not currently hold the stock, it may be prudent to wait for evidence of sustained profitability at healthier margins before initiating a position. The company has demonstrated an ability to win and execute large contracts, but the lack of dividends, margin compression, and management’s cautious outlook suggest the risk-reward profile is balanced rather than compelling at present.

Disclaimer: This analysis is based solely on the company’s published financial report and does not constitute investment advice. Investors should conduct their own research and consider their risk tolerance before making any investment decisions.

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