A Deep Dive into FY2024 Q4 of Econframe Berhad (KLSE: EFRAME)

Econframe Berhad announced its unaudited results for the FY2024 Q4, showing solid revenue growth despite cost pressures. The Group recorded a revenue of RM24.4 million, up 15.8% from RM21.0 million in the corresponding quarter of FY2023, driven primarily by the manufacturing segment, which contributed RM20.5 million, an 18.2% increase year-over-year.

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For the full financial year, Econframe reported a revenue of RM103.5 million, a 36.4% increase compared to RM75.9 million in FY2023. The manufacturing segment drove this growth, contributing RM86.4 million, while the trading segment recorded RM17.1 million, up 61.6% year-over-year. This growth reflects the Group’s strategy to capitalise on rising demand for construction materials amid infrastructure development initiatives.

Despite strong revenue, the Group reported a decline in profit before tax (PBT) to RM15.9 million, down 10.6% from RM17.8 million in FY2023. This was primarily due to amortisation of intangible assets worth RM3.7 million following the acquisition of Lee & Yong Aluminium Sdn Bhd (LYASB). Excluding this amortisation, adjusted PBT would be RM19.6 million, indicating a 9.9% increase compared to the previous year, highlighting underlying operational improvements.

Strategic investments, including the acquisition of LYASB and Trans United Sdn Bhd (TUSB), enhanced Econframe’s capabilities, particularly in the aluminium sector. The acquisition of assets for Duroe Glass Sdn Bhd (DGSB) represents a key move into the glass processing segment, aiming at vertical integration to bolster operational efficiency.

Econframe’s total assets rose to RM148.1 million, up from RM95.5 million in the previous year, due to the acquisitions and expansions. Notably, the Group held cash and bank balances of RM16.1 million, alongside short-term deposits of RM23.6 million, bringing total cash holdings to RM39.7 million.

Given the strong operating cash flow of RM12.1 million in FY2024 and a healthy cash pile, the company decided to declare an interim single-tier dividend of 2.0 sen per share, payable on 11 December 2024. This reflects confidence in their financial position and future outlook

Econframe is optimistic about its growth trajectory. The government’s focus on infrastructure in the Malaysia Budget 2025 is expected to boost demand for materials like aluminium and glass, aligning well with Econframe’s capabilities. The Group’s vertical integration and expansion into glass processing are anticipated to drive efficiency gains and profitability. Moreover, Econframe continues to seek potential acquisitions to leverage market opportunities and drive revenue growth.