In-depth analysis of Econframe Berhad's FY2024 fourth quarter
Econframe Berhad Announced its unaudited performance for the FY2024 fourth quarter, despite facing cost pressures, the company achieved steady revenue growth. The group recorded revenue of 24.4 million ringgit, a 15.8% year-on-year increase, compared to 21 million ringgit in the same period of FY2023, with the growth mainly coming from the manufacturing sector contributing 20.5 million ringgit, a 18.2% increase year-on-year.
Throughout the financial year, Econframe's revenue was 0.1035 billion ringgit, a 36.4% increase compared to 75.9 million ringgit in FY2023. This growth was mainly driven by the manufacturing sector contributing 86.4 million ringgit; at the same time, the revenue from the trade sector was 17.1 million ringgit, a 61.6% year-on-year increase. This reflects the group's strategy of increasing demand for building materials in the infrastructure development plan.
Despite strong revenue, the group reported a decrease in profit before tax (PBT) to 15.9 million ringgit, a 10.6% decrease from 17.8 million ringgit in FY2023. This was mainly due to the amortization of intangible assets value of 3.7 million ringgit after acquiring Lee & Yong Aluminum Sdn Bhd (LYASB). Excluding this amortization adjustment, the profit before tax would reach 19.6 million ringgit, a 9.9% year-on-year increase, highlighting operational improvement.
The group's global strategy investments, including the acquisition of LYASB and Trans United Sdn Bhd (TUSB), especially enhanced Econframe's capabilities in the aluminum industry. The acquisition of assets from Duroe Glass Sdn Bhd (DGSB) represents a key move by the group to enter the glass processing sector, aiming to achieve vertical integration to enhance operational efficiency.
Financial Condition and Dividend Announcement
Econframe's total assets have increased to 0.1481 billion ringgit, higher than last year's 95.5 million ringgit, mainly due to acquisitions and expansions. It is worth noting that the group holds 16.1 million ringgit in cash and bank deposits, with short-term deposits of 23.6 million ringgit, totaling 39.7 million ringgit in cash holdings.
Given the strong operating cash flow of 12.1 million ringgit achieved in FY2024, and with ample cash, the company has decided to announce a mid-tier single-tier dividend of 2.0 sen per share, to be paid on December 11, 2024. This reflects the company's confidence in its financial condition and future prospects.
Outlook and Future Prospects
Econframe is optimistic about its growth trajectory. The Malaysian government's emphasis on infrastructure in the 2025 budget is expected to increase demand for materials such as aluminum and glass, which align well with Econframe's capabilities. The group's vertical integration and expansion into the glass processing sector are expected to drive efficiency and profitability. Additionally, Econframe continues to seek potential acquisition opportunities to capitalize on market opportunities and drive revenue growth.
Conclusion
Econframe's Q4 FY2024 performance demonstrates steady revenue growth, benefiting from strategic acquisitions and business expansion. Despite the impact of depreciation on profit margins, the overall growth trend remains positive. Through continued initiatives and focus on market opportunities, the company is well positioned for sustainable growth and enhanced shareholder value, with the generous dividend in this quarter further reflecting this. $EFRAME (0227.MY)$ In achieving sustainable growth and enhancing shareholder value, the company has a good position, and this quarter's generous dividend further demonstrates this, through continued efforts and a focus on market opportunities.
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