In an Aug 11 report, Seet says: “We expect 2HFY2025 to be slighty better than 1HFY2025 and margin improvements to sustain in 2HFY2025 as well. We maintain our earnings forecasts.”
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’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.
“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,” says Seet. As a result, he conservatively thinks that it is better to wait and see for now and maintain his “hold” call.
See also: OCBC's Lim cuts fair value for SingPost to 49.5 cents
As at 1.50pm, shares in BKM are trading at 23 cents.
