SAM Engineering's 2Q Net Profit Falls 24% On-Year On Lower Revenue

The group recorded RM24.9 million in net profits during the quarter, compared with RM32.63 million in the corresponding quarter in FY2024. As a result, earnings per share came in lower at 3.68 sen, from 6.02 sen in 2QFY2024.

Quarterly revenue sank 13.63% to RM370.18 million, from RM428.62 million a year before, as its equipment segment reported lower revenue due to lower demand from the semiconductor and data storage customers and unfavourable exchange translation.

Despite the negative performance of the equipment segment, SAM’s aerospace segment registered higher profit during the quarter, due to contributions from its newly acquired subsidiary Aviatron (M) Sdn Bhd, as well as lower interest expense.

SAM acquired Aviatron from its major shareholder Singapore Aerospace Manufacturing Pte Ltd for US$43.4 million (approximately RM203.44 million) last year. Aviatron is the sole contract manufacturer of nacelle beams for Airbus 220, Airbus 350 and Boeing 787 aircraft.

The group did not declare any dividends for the quarter.

For the half year ended Sept 30, 2024 (1HFY2025), the group’s net profit fell more than one-third y-o-y to RM35 million from RM53.16 million, while cumulative revenue slipped 4.47% to RM703.59 million from RM736.51 million.

The lower profit for 1HFY2025 was due to lower contributions from both the equipment and aerospace segments.

The equipment segment saw its profit before tax drop 12.75% to RM50.93 million from RM58.37 million previously due to lower sales, while the aerospace segment incurred a loss before tax of RM1.26 million versus a profit before tax of RM11 million, no thanks to higher start-up costs in Thailand and lower government grants received.

The group had a total borrowing of RM184.5 million as at end-Sept 2024. On the other hand, it had cash and bank balances of RM43.51 million, while trade and other receivables stood at RM268.58 million.

Moving forward, SAM said Boeing Co’s machinists' strike, which spanned from mid-September to early November, has affected aircraft production and potentially demand for Boeing parts.

“We are working closely with our customers to adjust delivery schedules as needed,” it noted in the filing.

Nevertheless, the consistent growth in global air passenger travel, with Passenger Load Factor reaching a record high of 86.2% in August 2024, spells opportunities for SAM.

As of Sept 30, 2024, Airbus and Boeing Co together had an order backlog of 14,946 aircraft, translating to a longer delivery time of 10.9 and 7.6 years respectively, compared with 10.7 and 7.6 years as of June 30, 2024.

“Despite supply chain challenges, Airbus plans to increase production from currently 6 A350s per month to 12 by 2028,” the group said.

The group also sees both risks and opportunities in the continuing geopolitical uncertainties and trade tensions, especially in the semiconductor space.

After hitting a multiple-year high of RM6.74 in June this year, SAM's share price has erased nearly all its year-to-date gains. On Tuesday, the stock closed three sen or 0.70% lower at RM4.24, giving it a market capitalisation of RM2.76 billion.