EATECH’s Stunning Q2 Victory Sets the Stage for Explosive Growth
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In Q2 2024, $EATECH (5259.BMS)$ marked its eighth consecutive profitable quarter, reporting a significant increase in net profit to RM94.7 million from RM7.8 million in the previous year, primarily driven by one-off gains associated with its creditor scheme. Revenue for the quarter stood at RM30.6 million, slightly lower than the RM33.9 million recorded in Q2 2023. Despite the revenue decline, the company maintained a robust profit margin, and its core earnings excluding one-off items were RM5.3 million. The successful completion of the PN17 regularisation plan and new contract wins underscore EATech’s strengthened financial position and operational resilience.
Financial Performance
Financial Performance
Revenue and Profit Margins
$EATECH (5259.BMS)$ recorded a revenue of RM30.6 million in Q2 2024, down 10% from RM33.9 million in Q2 2023. This decline was mainly due to the expiration of a key FSO vessel contract, partially offset by higher utilization rates from fast crew boats and port operations. The cost of sales also decreased by 2%, contributing to a gross profit of RM11.2 million, though this represents a 20% decline from the previous year’s gross profit.
$EATECH (5259.BMS)$ recorded a revenue of RM30.6 million in Q2 2024, down 10% from RM33.9 million in Q2 2023. This decline was mainly due to the expiration of a key FSO vessel contract, partially offset by higher utilization rates from fast crew boats and port operations. The cost of sales also decreased by 2%, contributing to a gross profit of RM11.2 million, though this represents a 20% decline from the previous year’s gross profit.
Net Profit and Core Earnings
The company’s net profit for Q2 2024 was RM94.7 million, a dramatic increase from RM7.8 million in Q2 2023. This surge was largely due to write-backs related to the creditor scheme and costs associated with the PN17 regularisation plan. Excluding these one-off items, core earnings for the quarter were RM5.3 million. For the first half of 2024, the company reported a net profit of RM101.5 million, up from RM15.3 million in the same period in 2023, with core earnings amounting to RM12.2 million.
The company’s net profit for Q2 2024 was RM94.7 million, a dramatic increase from RM7.8 million in Q2 2023. This surge was largely due to write-backs related to the creditor scheme and costs associated with the PN17 regularisation plan. Excluding these one-off items, core earnings for the quarter were RM5.3 million. For the first half of 2024, the company reported a net profit of RM101.5 million, up from RM15.3 million in the same period in 2023, with core earnings amounting to RM12.2 million.
Balance Sheet and Cash Flow
As of June 30, 2024, $EATECH (5259.BMS)$ total equity increased to RM239.7 million from RM57.5 million as of December 31, 2023, reflecting a significant strengthening of its balance sheet. Cash and cash equivalents also improved to RM62.9 million, up from RM31.0 million at the end of 2023, driven by positive cash flow from financing activities, including the issuance of new shares.
Significant Events
PN17 Regularisation and Creditor Scheme
A key highlight of Q2 2024 was the completion of $EATECH (5259.BMS)$ PN17 regularisation plan, which included a successful creditor scheme leading to significant write-backs and one-off gains. This achievement has positioned the company on a stronger financial footing and is expected to result in the upliftment of its PN17 status by Q1 2025.
As of June 30, 2024, $EATECH (5259.BMS)$ total equity increased to RM239.7 million from RM57.5 million as of December 31, 2023, reflecting a significant strengthening of its balance sheet. Cash and cash equivalents also improved to RM62.9 million, up from RM31.0 million at the end of 2023, driven by positive cash flow from financing activities, including the issuance of new shares.
Significant Events
PN17 Regularisation and Creditor Scheme
A key highlight of Q2 2024 was the completion of $EATECH (5259.BMS)$ PN17 regularisation plan, which included a successful creditor scheme leading to significant write-backs and one-off gains. This achievement has positioned the company on a stronger financial footing and is expected to result in the upliftment of its PN17 status by Q1 2025.
Contract Wins and Business Expansion
$EATECH (5259.BMS)$ secured several important contracts during the quarter, including a one-year extension with Northport (Malaysia) Bhd for harbour tugboats services valued at RM6.4 million and a six-month contract with PETRONAS Carigali Sdn Bhd for Fast Crew Boats worth RM3.6 million. These contracts are expected to contribute positively to the company’s revenue and cash flow in the coming quarters.
$EATECH (5259.BMS)$ secured several important contracts during the quarter, including a one-year extension with Northport (Malaysia) Bhd for harbour tugboats services valued at RM6.4 million and a six-month contract with PETRONAS Carigali Sdn Bhd for Fast Crew Boats worth RM3.6 million. These contracts are expected to contribute positively to the company’s revenue and cash flow in the coming quarters.
Leadership and Corporate Changes
The quarter also saw significant changes in $EATECH (5259.BMS)$ leadership, with the appointment of new executive and non-executive directors, including Datuk Wira Mubarak and Dato Lai as Executive Directors. These appointments are aimed at enhancing the company’s strategic direction and governance as it enters a new phase of growth.
Market Position and Competitive Landscape
$EATECH (5259.BMS)$ has strengthened its position within the marine transportation and offshore services sector in Malaysia, leveraging its strong relationships with key players like PETRONAS. The successful execution of its regularisation plan and the expansion of its order book to RM136.4 million, with an additional RM281.2 million for the extendable period, highlight its competitive advantage in securing long-term contracts. However, the industry remains competitive, with challenges from regional players and fluctuating demand in the oil and gas sector.
Outlook and Future Forecast
Financial Trajectory
Looking ahead, $EATECH (5259.BMS)$ is well-positioned to continue its growth trajectory, supported by a strong order book and improved operational efficiency. The anticipated upliftment of its PN17 status by Q1 2025 is expected to further enhance investor confidence and open new opportunities for expansion.
The quarter also saw significant changes in $EATECH (5259.BMS)$ leadership, with the appointment of new executive and non-executive directors, including Datuk Wira Mubarak and Dato Lai as Executive Directors. These appointments are aimed at enhancing the company’s strategic direction and governance as it enters a new phase of growth.
Market Position and Competitive Landscape
$EATECH (5259.BMS)$ has strengthened its position within the marine transportation and offshore services sector in Malaysia, leveraging its strong relationships with key players like PETRONAS. The successful execution of its regularisation plan and the expansion of its order book to RM136.4 million, with an additional RM281.2 million for the extendable period, highlight its competitive advantage in securing long-term contracts. However, the industry remains competitive, with challenges from regional players and fluctuating demand in the oil and gas sector.
Outlook and Future Forecast
Financial Trajectory
Looking ahead, $EATECH (5259.BMS)$ is well-positioned to continue its growth trajectory, supported by a strong order book and improved operational efficiency. The anticipated upliftment of its PN17 status by Q1 2025 is expected to further enhance investor confidence and open new opportunities for expansion.
Fair Value
Based on the estimated full-year earnings and a conservative P/E ratio of 10x, the fair value of $EATECH (5259.BMS)$ stock is approximately RM1.53 per share. This valuation assumes that the company will continue its current performance trend for the remainder of the year and that the market will value the stock in line with typical industry multiples.
This estimated fair value represents a potential target price for the stock, assuming no significant changes in market conditions or company performance. Investors should consider this fair value in the context of their risk tolerance and market outlook.
This estimated fair value represents a potential target price for the stock, assuming no significant changes in market conditions or company performance. Investors should consider this fair value in the context of their risk tolerance and market outlook.
Risks and Opportunities
The company faces potential risks from market volatility, particularly in the oil and gas sector, which could impact demand for its services. However, $EATECH (5259.BMS)$ focus on operational efficiency, cost management, and securing long-term contracts should mitigate these risks. The company’s strategic initiatives, including potential new contracts and continued operational improvements, are likely to contribute positively to its financial performance in the coming quarters.
Conclusion
$EATECH (5259.BMS)$ Q2 2024 performance underscores its resilience and strategic focus, achieving impressive profitability despite a slight decline in revenue. The completion of the PN17 regularisation plan and the strengthening of its leadership team position the company for continued success. Investors can remain cautiously optimistic, with the expectation of sustained profitability and growth leading up to the anticipated PN17 upliftment in 2025. $EATECH (5259.BMS)$ ability to secure new contracts and maintain strong core earnings will be key indicators of its future performance.
The company faces potential risks from market volatility, particularly in the oil and gas sector, which could impact demand for its services. However, $EATECH (5259.BMS)$ focus on operational efficiency, cost management, and securing long-term contracts should mitigate these risks. The company’s strategic initiatives, including potential new contracts and continued operational improvements, are likely to contribute positively to its financial performance in the coming quarters.
Conclusion
$EATECH (5259.BMS)$ Q2 2024 performance underscores its resilience and strategic focus, achieving impressive profitability despite a slight decline in revenue. The completion of the PN17 regularisation plan and the strengthening of its leadership team position the company for continued success. Investors can remain cautiously optimistic, with the expectation of sustained profitability and growth leading up to the anticipated PN17 upliftment in 2025. $EATECH (5259.BMS)$ ability to secure new contracts and maintain strong core earnings will be key indicators of its future performance.
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