Maybank Research is keeping its &ldquo hold&rdquo recommendation on Beng Kuang Marine (BKM) with a higher target price of 22 cents from 19 cents previously, following its latest 1HFY2025 ended June results release.

 

Revenue for the first half fell 15.2% y-o-y to $50.8 million, while Patmi was $2.9 million, in line with Maybank&rsquo s estimates. Profit margin has improved from 35.5% in 1HFY2024 to 38.2% in 1HFY2025, which analyst Jarick Seet find &ldquo encouraging&rdquo .

 

In an Aug 11 report, Seet says: &ldquo We expect 2HFY2025 to be slighty better than 1HFY2025 and margin improvements to sustain in 2HFY2025 as well. We maintain our earnings forecasts.&rdquo

 

The Infrastructure & Engineering (IE) business accounted for 81.1% of overall revenue in 1HFY2025. It encountered some delays due to the timing of projects execution at the start of the year in its Africa and Guyana operations, but Seet believes that it should fare better in 2HFY2025 due to the absence of this delay. BKM&rsquo s supply deck equipment business has reoriented its market focus towards SEA and India and have secured new contracts valued at $6.95 million in 1HFY2025.

 

Meanwhile, Corrosion Prevention (CP) revenues are largely recurring in nature and remained resilient at $9.6 million in 1HFY2025, a slight dip y-o-y. Singapore operations delivered a stronger performance from Floating Production Storage and Offloading (FPSO) and offshore wind farm projects while Batam operations had lower work volume due to key projects reaching their tail-end stages in 1QFY2025. Management is engaged in tendering for various upcoming projects at its Batam operations.

 

&ldquo While we expect better 2HFY2025 earnings as compared to 1HFY2025, warrants dilution would put a cap on its share price upside for FY2025. With declining oil prices, which we highlighted as a key risk, we believe demand for future projects and margins may also be impacted if oil prices continue to decline,&rdquo says Seet. As a result, he conservatively thinks that it is better to wait and see for now and maintain his &ldquo hold&rdquo call.

 

- The Group&rsquo s transition to an asset-light and service-oriented business model that is anchored by its two core business divisions, with the IE division generating revenue of S$41.17 million and the CP division contributing S$9.59 million in 1H2025

 

- Enhanced cost control measures and productivity improvements, together with the Group&rsquo s strategic restructuring initiatives undertaken in recent years, have progressively improved its gross profit margin to 38.2% in 1H2025, as compared to 35.5% in 1H2024

 

- While the absence of other gains and foreign exchange losses weighed on financial results in 1H2025, the Group&rsquo s underlying performance has been resilient with healthy cash flow generation

 

- Despite the impact of foreign exchange losses of S$1.19 million in 1H2025, the Group posted a profit attributable to shareholders of S$2.91 million for 1H2025, as compared to S$3.06 million in 1H2024 (excluding a one-time gain of S$5.51 million)

 

- As compared to 31 December 2024, the Group&rsquo s balance sheet continues to strengthen with cash and cash equivalents increasing to S$25.13 million, while total equity increased to S$33.08 million as at 30 June 2025

 

- Emerging growth trends in the offshore and marine sector are expected to support stable business performance through the second half of 2025

 

The Group&rsquo s IE division continued to be main contributor, accounting for 81.1% of overall revenue in 1H2025: Under IE, the Group&rsquo s asset integrity solutions for operating floating assets such as Floating Production Storage and Offloading vessels (&ldquo FPSO&rdquo ) and Floating Storage and Offloading vessels (&ldquo FSO&rdquo ), among others, delivered revenue of S$41.17 million in 1H2025 despite some delays due to the timing of projects execution at the start of the year in the Group&rsquo s Africa & Guyana operations.

 

Despite the short-term impact in 1H2025, the Group continues to maintain a healthy and stable pipeline of ongoing work orders, driven by rising demand for offshore in-situ services for FPSO vessels and expansion into Latin America (where FPSO deployment commands higher rates).

 

Established as a proficient &ldquo one-stop&rdquo in-situ turnkey solutions provider, revenue contribution from this service-centric business segment has become the key revenue contributor of the Group over the past few years. Aiming to secure new contracts and build a larger customer base globally, the Group

has diversified its geographical scope of work from West Africa to South America and China as well as

Southeast Asia.

 

The Group&rsquo s supply deck equipment business has reoriented its market focus towards Southeast Asia and India, and as at 30 June 2025, the Group has secured new contracts valued at S$6.95 million.

 

Moving ahead, the Group aims to grow its recurring revenue base through enhanced service and maintenance offerings, as well as the sale of spare parts to further nurture this business unit into another growth segment.

 

For the Group&rsquo s CP, revenue are largely recurring in nature, revenue from CP remained relatively resilient at S$9.59 million in 1H2025, as compared to S$9.81 million in 1H2024. There was contrasting performance across its two core operating markets, where Singapore&rsquo s operations delivered a stronger performance from FPSO and offshore wind farm projects, while its Batam&rsquo s operations had lower work volume due to key projects reaching its tail-end stages in 1Q2025. 

 

The Group is actively engaged in tendering for various upcoming projects at its Batam CP operations.

 

Commenting on the Group&rsquo s 1H2025 results, Mr Yong Jiunn Run, Chief Executive Officer of Beng Kuang Group, said: &ldquo Despite a slower start to the year and persistent headwinds from a weaker USD, we remain cautiously optimistic on our overall performance. In the face of ongoing economic and geopolitical uncertainties, our first-half results underscore the robustness and resilience of our assetlight, service-oriented business model.

 

Our continued focus on cash flow, profitability, and sustainability underpins our disciplined cost management and ongoing efforts to enhance operational efficiency. These priorities allow us to remain agile and responsive in a constantly evolving market environment.

 

Looking ahead, we expect to sustain and maintain our business momentum in the second half of 2025 and will continue to position the Group strategically to capture emerging growth opportunities across the offshore and marine sectors.&rdquo