Kim Heng clinches $10.3m contract, upbeat on more orders

SINGAPORE – Offshore and marine player Kim Heng has clinched a contract totalling US$7.8 million (S$10.3 million) to provide design, engineering, modification and shipbuilding services for a marine-based asset, the company said on Monday.

The latest contract has boosted the mainboard-listed company’s order book to above $100 million, reckon analysts who follow the company. Kim Heng does not disclose its order-book numbers.

Chief executive and executive chairman Thomas Tan said the company is well positioned to capture more contracts in 2023, especially in offshore renewables projects.

“The group remains well positioned and equipped with shore-based marine assets and offshore vessels that enable us to leverage our knowledge in the offshore renewable industry throughout Asia and the United States to support the global energy transition towards a sustainable future,” he said in a statement.

After struggling for almost a decade in what some in the industry call a “once-in-a-generation” depression,

Kim Heng has bounced back into the black

over the past year, thanks to rising demand for energy.

In February, the company reported a second-half net profit of $2.3 million for the year ended Dec 31, 2022, rebounding from a six-month loss of $2.25 million a year earlier.

For the full year to end-December, Kim Heng posted net earnings of $7.4 million, reversing a $5.9 million loss in financial year 2021.

The results came on the back of a 44 per cent rise in revenue in the second half – from July to December – to $49.37 million, which boosted full-year revenue by some 26 per cent to $79.84 million.

Notably, gross profit margins for the second half expanded to 40 per cent from 27 per cent a year earlier. For the full year, margins expanded to 35 per cent from 25 per cent in 2021.

“Our revenue continues to grow strongly on the back of solid demand from both the traditional energy and renewable energy segments,” said Mr Tan. “The demand for support and engineering services that we provide remains strong.”

Kim Heng’s balance sheet was also stronger as at end-December 2022, with cash and cash equivalents at $11.7 million. Overall cash generated from operating activities after changes to working capital and income tax paid amounted to $18.9 million.

The company announced a dividend payout of 0.2835 cent per share for the period, which will go ex-dividend on May 12. 

Kim Heng shares were trading 0.2 cent, or 1.9 per cent, higher at 11 cents as at 11.02am on Tuesday. It closed unchanged at 10.8 cents.