GSS Energy Limited FY2025 Financial Review: Recovery in Revenue, Continued Operating Challenges

GSS Energy Limited has released its unaudited financial statements for the twelve months ended 31 December 2025. The company, engaged primarily in the precision engineering (PE) and electric vehicle (EV) businesses, reported significantly higher revenue for the year but continues to face profitability challenges. Below, we provide a concise analysis of the key financial metrics, performance trends, and strategic developments.

Key Financial Metrics

Historical Performance Trends

• Revenue: FY2025 revenue surged 58.7% to S\$158.5 million from S\$99.9 million in FY2024, driven by robust demand from a new energy storage sector customer and resilience in the precision engineering business.
• Profitability: Despite higher sales, the Group remained loss-making. Net loss for FY2025 was S\$7.85 million, a substantial improvement over the S\$16.62 million loss in FY2024. Gross margin declined to 7.4% (FY2024: 8.4%) due to higher material and operating costs.
• EPS: Loss per share narrowed to (0.74) cents from (1.93) cents the prior year, reflecting reduced losses even as the share base expanded due to a large rights issue.
• Net Asset Value: Decreased to 2.05 cents/share (FY2024: 4.91 cents/share) as the company’s equity base was diluted and losses continued.

Exceptional Earnings and Expenses

• Impairments: FY2025 saw a S\$4.0 million impairment on certain EV business assets. FY2024 had a larger S\$6.4 million goodwill impairment in the EV segment.
• Other Losses: Other losses decreased to S\$4.4 million (FY2024: S\$7.9 million), mainly because of the absence of last year’s large goodwill impairment.
• Finance Costs: Dropped sharply to S\$0.69 million (FY2024: S\$2.04 million) as bank borrowings were paid down using proceeds from the rights issue and cash flows.

Cash Flow and Balance Sheet Developments

• Cash Flow: Operating cash flow remained positive at S\$7.39 million for FY2025, reflecting improved working capital management. However, net cash decreased by S\$5.12 million to S\$3.55 million, mainly due to loan repayments and investments in machinery and product development.
• Borrowings: Bank loans and borrowings fell sharply to S\$5.49 million (FY2024: S\$17.43 million).
• Assets: Intangible assets declined substantially due to amortization and impairment. Property, plant, and equipment increased marginally as new investments outweighed depreciation and impairments.
• Trade Receivables/Payables: Three trading deals (S\$5.51 million each in receivables and payables) are currently in legal dispute, which may affect future results.

Share Capital and Dilution

• Rights Issue: In January 2025, the company completed a rights issue, raising S\$5.47 million and increasing the share base by nearly 70% to 1,066,862,719 shares. Proceeds were used for partial loan repayment, working capital, and business expansion, primarily in the EV segment.
• Dilution: The rights issue and outstanding options/warrants mean substantial dilution for shareholders.

Dividends

• No dividend was declared for FY2025 or FY2024, reflecting ongoing losses and the need to conserve cash.

Chairperson’s Statement

As the full Chairman’s Statement is not present in the report, there is no direct quote to include. However, the tone of the management commentary is cautiously optimistic regarding the PE business, but acknowledges ongoing challenges in the EV segment and legal disputes.

Significant Events and Outlook

• Legal Disputes: Three trading deals totaling S\$5.51 million in both receivables and payables are under dispute. The company is contesting these claims and has sought legal counsel. Outcomes are pending.
• EV Segment: The company delivered its first small order of battery packs for testing to a mobility group, marking progress but not yet generating significant revenue. Further orders may depend on test outcomes.
• O&G Segment: The company’s oil & gas associate remains non-operational, awaiting the outcome of an appeal to the Indonesian authorities concerning a terminated concession.
• Cost Pressures: Management expects cost pressures and foreign exchange volatility to persist, but aims to offset these with operational improvements and supply chain management.

Conclusion and Recommendations

Overall Assessment: GSS Energy Limited delivered a strong recovery in revenue in FY2025, but remains loss-making. Operating cash flow is positive, and net losses have narrowed, but the company faces ongoing challenges in profitability, asset impairments, legal disputes, and a diluted equity base. The EV business is still at a nascent stage, with meaningful contributions pending.

Recommendations

• If you currently hold GSS Energy stock: Consider maintaining a cautious stance. While the company’s revenue growth and actions to reduce losses are encouraging, the lack of profitability, ongoing dilution, legal uncertainties, and no dividend make this a high-risk holding. Monitor upcoming results for progress on EV orders, legal outcomes, and further improvements in margins and cash flow. Consider reducing exposure if the business does not demonstrate a clear path to sustainable profitability within the next reporting periods.
• If you do not hold GSS Energy stock: It may be prudent to wait on the sidelines. The company is in a turnaround phase and carries significant risks. Only consider entry if there is clear evidence of sustained profitability, resolution of legal disputes, and successful commercialisation of the EV segment, which could drive meaningful upside from current levels.

Disclaimer: This analysis is based strictly on the company’s official financial statements and does not constitute investment advice. Investors should consider their own risk tolerance and conduct further due diligence or consult a professional advisor before making any investment decisions.

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