Beng Kuang Marine was one of the top gainers in 2024, with the counter surging some 283.3% in the past 12 months to trade at 22 cents as of Jan 17, giving it a market cap of $45.8 million. This growth follows the company’s decision to undergo a thorough business restructuring under the leadership of its new CEO, Yong Jiunn Run.
The offshore and marine company, listed in 2004 during a robust industry upcycle, weathered the subsequent downturn that undermined many of its peers. However, it remained in poor condition until Yong, a former CIMB banker, steered it towards an asset-light model, streamlining its capital-intensive business segments for greater efficiency.
As the industry rebounds, Beng Kuang has raised new funds and shed its loss-making ventures, including ship chartering, hardware distribution and bottled water supply. It has also been removed from the SGX Watchlist.
“Several businesses, such as the livestock carrier one (ship chartering), were bleeding and cost-inefficient. They could not create value and there was no chance for Beng Kuang to emerge as a key player in the market, be competitive and make a difference,” Yong said in a previous interview with The Edge Singapore.
Although things are looking up, Yong remains cautiously optimistic. He says: “Although we are positive now, it doesn’t mean that it is sustainable. We need to seek out and build new revenue engines. We have to remain capex-light and we will not ‘buy’ our profit anymore.”
Yong envisions the infrastructure engineering division becoming more service-oriented and asset-light, with the Batam yard as its sole asset. “Being asset-light will help the company be more nimble and agile. If the industry turns, it will be easier for us to extricate and rebound. We won’t suffer like we did during the pandemic and the oil and gas downturn,” he adds.
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In a sign that the company is trying to inject some new blood, it announced on Jan 6 the appointment of 28-year-old Dylan Chua as the CEO of its corrosion prevention division, one of the company’s two key units. Chua is the son of the company’s chief operating officer Chua Beng Hock and nephew of executive chairman Chua Beng Yong.
Beng Kuang started to show signs of recovery in FY2023 ended Dec 31, 2023. It reported a $3.4 million profit, reversing from the $8.6 million loss of the previous year. Additionally, the company no longer incurred losses from discontinued operations. The earnings momentum was carried into FY2024. In its 3QFY2024 business update, the company reported a revenue gain of 25% y-o-y to $26.8 million, whereas profit before tax (PBT) came in at $3.79 million, up 27% y-o-y.
Jarick Seet of Maybank Securities seems to have high expectations for this company. He noted that Beng Kuang’s PBT growth missed expectations partially due to the dry-docking of one of its customer’s accommodation barges. Meanwhile, Beng Kuang’s infrastructure engineering (IE) segment’s growth in the quarter remained robust, fuelled by demand for asset integrity solutions supporting floating production storage and offloading (FPSO) as well as floating storage and offloading (FSO) in onshore and offshore markets.
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Seet, who has a “buy” call on this counter and 27 cents target price, slightly lowered from 29 cents previously, reckons Beng Kuang’s corrosion prevention business is also on track to make a slight profit in FY2024 from loss-making a year ago and to grow further and generate earnings of between $2 million to $2.5 million in the current FY2025.
