The way he sees it, Yon believes Beng Kuang’s first quarter performance is a reflection of healthy operational activity, suggesting that the y-o-y profit decline is likely due to spillover delays from 4QFY2026 and he does not expect further delays moving forward.
Noting that gross profit margin was dropped by 9.9 percentage points y-o-y to 26.5%, he suggests that this is not due to a weakening of fundamentals, but more of a feature of the offshore and marine (O&M) sector where O&M engineering businesses often experience quarterly earnings volatility depending on project stages, customer delivery schedules and work composition.
Yon, presumably heartened by Beng Kuang’s orderbook and its soon-to-be wholly-owned subsidiary Asian Sealand Offshore and Marine (ASOM), states that revenue visibility is “healthy” and he expects earnings momentum to strengthen in the second half of the year.
He points out three sources for his orderbook optimism. Firstly, Beng Kuang has secured around $56 million of contracts as at 1QFY2026, with around $51 million of these to be recognised in 2026. This is augmented by ASOM’s $27.6 million of floating, production, storage and offloading (FPSO) and floating, storage and offloading (FSO) related contracts, where it was noted that around 80% of these were FPSO-related work and recurring in nature. In addition, subsidiaries PT Nexus Engineering Indonesia and International Offshore Equipments are providing long-term earnings visibility through fabrication, shipbuilding and offshore projects extending into FY2027 and FY2028.
Another point that is reinforcing Yon’s confidence is institutional interest and insider accumulation of shares in the company. Institutional investors Amova Asset Management and Tokio Marine Life Insurance Singapore acquired shares from executive director Chua Meng Hua. Meanwhile executive chairman Chua Beng Yong and CEO Yong Jiunn Run, increased their stakes in the company to 4.92% and 5.30% respectively.
To Yon, this signals management’s confidence in the company. “More importantly, the transaction strengthens Beng Kuang Marine’s institutional shareholder base at a time when offshore and FPSO-related activity continues to improve globally,” he adds.
On the backdrop of increased institutional participation, Yon values the counter at 13 times of forward FY2027 P/E or 69 cents.
Shares in Beng Kuang traded at 57.5 cents, up half-a-cent, or 0.9% at 12pm on May 8.
