KGB Latest QR Summary
KGB 2024 Second Quarter Financial Highlights Summary
1. Financial Highlights
❌- Decrease in Revenue: In the second quarter of 2024, revenue decreased by 24% year-on-year to 0.321206 billion Malaysian Ringgit. The revenue for the first half of 2024 was 0.660485 billion Malaysian Ringgit, a 10% decrease compared to the previous period. This is mainly due to several major projects in Singapore and Malaysia moving out of the acceleration phase and nearing completion.
✅- Increase in Gross Profit: Gross profit for the second quarter and first half of 2024 increased by 21%. This is mainly due to changes in revenue structure, favorable project portfolio, and contributions from the industrial gas segment.
✅- Profit Growth: Pre-tax and after-tax profits for the second quarter of 2024 showed strong growth, with pre-tax and after-tax profits increasing by 34% year-on-year. In the first half of 2024, pre-tax profit grew by 44%, and after-tax profit increased by 43%.
✅- Increase in Shareholders' Equity: As of June 30, 2024, shareholders' equity (excluding non-controlling interests) increased from 0.3326 billion Malaysian Ringgit as of December 31, 2023 to 0.3964 billion Malaysian Ringgit. This growth is attributed to the exercise of warrants and quarterly profits. During this period, the group proposed a total dividend payout of 30 million Malaysian Ringgit to shareholders, of which 16.605843 million Malaysian Ringgit has been paid this quarter.
✅- Effective Tax Rate: The group's effective tax rate for the current financial year is lower than the statutory tax rate, mainly due to the relatively low tax rate in Singapore. Additionally, there are some tax exemptions due to research and development expenses in China.
❌- Decrease in Revenue: In the second quarter of 2024, revenue decreased by 24% year-on-year to 0.321206 billion Malaysian Ringgit. The revenue for the first half of 2024 was 0.660485 billion Malaysian Ringgit, a 10% decrease compared to the previous period. This is mainly due to several major projects in Singapore and Malaysia moving out of the acceleration phase and nearing completion.
✅- Increase in Gross Profit: Gross profit for the second quarter and first half of 2024 increased by 21%. This is mainly due to changes in revenue structure, favorable project portfolio, and contributions from the industrial gas segment.
✅- Profit Growth: Pre-tax and after-tax profits for the second quarter of 2024 showed strong growth, with pre-tax and after-tax profits increasing by 34% year-on-year. In the first half of 2024, pre-tax profit grew by 44%, and after-tax profit increased by 43%.
✅- Increase in Shareholders' Equity: As of June 30, 2024, shareholders' equity (excluding non-controlling interests) increased from 0.3326 billion Malaysian Ringgit as of December 31, 2023 to 0.3964 billion Malaysian Ringgit. This growth is attributed to the exercise of warrants and quarterly profits. During this period, the group proposed a total dividend payout of 30 million Malaysian Ringgit to shareholders, of which 16.605843 million Malaysian Ringgit has been paid this quarter.
✅- Effective Tax Rate: The group's effective tax rate for the current financial year is lower than the statutory tax rate, mainly due to the relatively low tax rate in Singapore. Additionally, there are some tax exemptions due to research and development expenses in China.
2. The business department and regional distribution.
❌- Business Department: The Ultra-High Purity (UHP) division remains the main source of income, but revenue has decreased. The industrial gas sector shows growth. The process engineering and turnkey contracting department revenues declined.
- Regional Distribution: In the first half of 2023, revenue mainly came from Malaysia (42%), followed by China (31%), Singapore (23%), and Taiwan (1%). In the second quarter of 2024, revenue from China saw significant growth, while revenue from Taiwan declined.
❌- Business Department: The Ultra-High Purity (UHP) division remains the main source of income, but revenue has decreased. The industrial gas sector shows growth. The process engineering and turnkey contracting department revenues declined.
- Regional Distribution: In the first half of 2023, revenue mainly came from Malaysia (42%), followed by China (31%), Singapore (23%), and Taiwan (1%). In the second quarter of 2024, revenue from China saw significant growth, while revenue from Taiwan declined.
3. Future Prospects
✅- Semiconductor Industry Growth: According to data from the International Semiconductor Equipment & Materials Association (SEMI), global semiconductor manufacturing equipment sales by original equipment manufacturers are projected to reach $109 billion in 2024, a 3.4% year-over-year growth. Sales for 2025 are expected to reach a new high of $128 billion, driven by the front-end and back-end markets.
✅- New Contracts and Expansion: In the six months leading up to June 30, 2024, the group has secured new contracts worth 0.564 billion ringgit. The second liquid carbon dioxide plant in Juhat started operation on March 25, 2024, increasing the company's annual production capacity to 0.12 million tons. This strategic expansion enables the group to effectively meet the growing export demand amid the global carbon dioxide shortage.
✅- Confidence in Performance: Unless there are unforeseen circumstances, the company is confident in achieving outstanding financial performance in the 2024 fiscal year through the execution of existing orders and the continuous growth of the industrial gas business.
✅- Semiconductor Industry Growth: According to data from the International Semiconductor Equipment & Materials Association (SEMI), global semiconductor manufacturing equipment sales by original equipment manufacturers are projected to reach $109 billion in 2024, a 3.4% year-over-year growth. Sales for 2025 are expected to reach a new high of $128 billion, driven by the front-end and back-end markets.
✅- New Contracts and Expansion: In the six months leading up to June 30, 2024, the group has secured new contracts worth 0.564 billion ringgit. The second liquid carbon dioxide plant in Juhat started operation on March 25, 2024, increasing the company's annual production capacity to 0.12 million tons. This strategic expansion enables the group to effectively meet the growing export demand amid the global carbon dioxide shortage.
✅- Confidence in Performance: Unless there are unforeseen circumstances, the company is confident in achieving outstanding financial performance in the 2024 fiscal year through the execution of existing orders and the continuous growth of the industrial gas business.
4. Other Developments
✅- The company proposed to acquire the remaining 9.29% equity of Ace Gases Sdn Bhd.
❌- Derivative financial instruments and lease liabilities: As of June 30, 2024, there are no outstanding foreign exchange forward contracts. Lease liabilities increased due to ISO tank lease agreements in the industrial gas division.
❌- Major litigation: Updated legal proceedings against Huien Mechanical Engineering Co., Ltd. and arbitration proceedings initiated by Keldean Technology Private Limited against JCT Industrial Group Private Limited.
✅- Dividend Payable: The board proposed and paid the first interim tax-exempt dividend, and proposed payment of the second interim tax-exempt dividend.
✅- The company proposed to acquire the remaining 9.29% equity of Ace Gases Sdn Bhd.
❌- Derivative financial instruments and lease liabilities: As of June 30, 2024, there are no outstanding foreign exchange forward contracts. Lease liabilities increased due to ISO tank lease agreements in the industrial gas division.
❌- Major litigation: Updated legal proceedings against Huien Mechanical Engineering Co., Ltd. and arbitration proceedings initiated by Keldean Technology Private Limited against JCT Industrial Group Private Limited.
✅- Dividend Payable: The board proposed and paid the first interim tax-exempt dividend, and proposed payment of the second interim tax-exempt dividend.
⚠️ 5. Investment Conclusion
Assessing the investment in Keldean Group is complex and depends on various factors. On the positive side, the company shows growth in areas such as the industrial gas sector and has strong orders and prospects in the semiconductor industry. The improvement in shareholder equity and net cash balance also indicates financial stability.
Assessing the investment in Keldean Group is complex and depends on various factors. On the positive side, the company shows growth in areas such as the industrial gas sector and has strong orders and prospects in the semiconductor industry. The improvement in shareholder equity and net cash balance also indicates financial stability.
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