Avangaad Berhad Q2 2025: Navigating Post-Restructuring Waters with a Strong Order Book
Avangaad Berhad, a key player in Malaysia’s marine logistics sector, has released its financial results for the second quarter ended June 30, 2025. After successfully exiting its PN17 status earlier this year, all eyes are on the company’s operational performance. The latest report reveals a story of stable top-line growth and operational strengthening, though headline profit figures show a sharp decline due to a high base effect from last year’s restructuring exercise. Let’s dive deeper into the numbers.
Key Highlights from the Q2 2025 Report:
- Steady Revenue Growth: Quarterly revenue increased by 5% year-on-year, driven by higher charter rates.
- Profit Normalisation: Profit before tax saw a significant drop, primarily because the comparative quarter in 2024 included a substantial one-off income from a debt waiver related to its regularisation plan.
- Strong Order Book: The Group’s total order book stands at a robust RM437.7 million (RM177.6 million firm and RM260.1 million in extensions), providing clear earnings visibility.
- Healthy Cash Position: Cash and cash equivalents have nearly doubled since the end of 2024, indicating strong cash management.
Core Financial Performance: A Tale of Two Quarters
At first glance, the profit figures for Q2 2025 might seem alarming compared to the same period last year. However, it’s crucial to understand the context. The second quarter of 2024 included a one-off, non-recurring income of over RM150 million from a debt waiver as part of its Scheme of Arrangement (SOA). Excluding this, the underlying operational performance shows resilience and growth.
Quarterly Results Breakdown (Q2 2025 vs Q2 2024)
Q2 2025 (Current Quarter)
Revenue: RM 32.3 million
Gross Profit: RM 12.7 million
Profit Before Tax (PBT): RM 8.2 million
Net Profit (PAT): RM 6.0 million
Basic EPS: 0.45 sen
Q2 2024 (Comparative Quarter)
Revenue: RM 30.6 million
Gross Profit: RM 11.2 million
Profit Before Tax (PBT): RM 140.8 million
Net Profit (PAT): RM 94.6 million
Basic EPS: 7.14 sen
Revenue for the quarter grew by 5% to RM32.3 million, primarily due to higher charter rates for its fast crew boat contracts. More impressively, gross profit increased by 13%, suggesting better operational efficiency and margin management. The company also showed strong sequential growth, with profit before tax rising 50% from the immediate preceding quarter (Q1 2025), thanks to higher vessel utilisation and the recovery of earlier provisions.
A Look at Financial Health
A company’s financial health is best assessed through its balance sheet and cash flow statement. Avangaad shows positive signs in both areas, indicating a more stable foundation post-restructuring.
Balance Sheet Highlights
The Group’s balance sheet has strengthened since the end of the last financial year. Total equity has increased, while total liabilities have decreased, leading to a healthier financial position.
| Balance Sheet Item | As at 30 June 2025 (RM’000) | As at 31 Dec 2024 (RM’000) |
|---|---|---|
| Total Assets | 468,931 | 474,771 |
| Total Liabilities | 165,717 | 182,826 |
| Total Equity | 303,214 | 291,945 |
| Cash and Cash Equivalents | 37,123 | 19,129 |
| Total Borrowings | 82,383 | 88,958 |
| Net Assets per Share (RM) | 0.23 | 0.22 |
Key positive takeaways include a significant 94% increase in cash reserves and a reduction in total borrowings. This demonstrates disciplined financial management and improved liquidity.
Cash Flow Strength
For the six-month period, Avangaad generated a strong net cash from operating activities of RM30.5 million. This is a remarkable turnaround from the negative RM35.7 million recorded in the same period last year. This positive operating cash flow is a vital sign of a healthy core business, capable of funding its own operations and investments without relying heavily on external financing.
Prospects and Strategic Direction
With its financial house in order, Avangaad is firmly focused on the future. The management has outlined a clear three-phase growth plan aimed at reinforcing its market position and expanding its reach.
The company’s prospects are anchored by a substantial order book of RM177.6 million, with an additional RM260.1 million in extension options. Recent contract wins in the first half of 2025 further solidify this outlook:
- Three Fast Crew Boat contracts worth approximately RM29.19 million.
- New and extended contracts from Northport (Malaysia) Bhd totalling RM66.8 million for harbour tugboat services.
The company’s growth strategy involves:
- Phase 1: Fortifying its position through new contracts, increasing fleet utilisation, and tight cost management.
- Phase 2: Expanding its fleet size and asset types, deepening its presence in Malaysian ports, and balancing its earnings mix across O&G and non-O&G segments.
- Phase 3: Regional expansion into ASEAN markets and modernising its fleet to lead in sustainable marine solutions.
Summary and Investment Recommendations
This report marks a significant milestone for Avangaad, showcasing its first “clean” quarter after a lengthy restructuring. The company has successfully shifted its focus from financial revitalisation to operational execution. While the year-on-year profit comparison is skewed, the underlying metrics point towards a positive trajectory: stable revenue, improving margins, a fortified balance sheet, and strong operating cash flow. The solid order book and a clear strategic plan provide a roadmap for sustainable growth. As always, this analysis is for informational purposes only and does not constitute any investment advice.
Investors should continue to monitor the company’s ability to execute its three-phase plan and convert its strong order book into consistent earnings. Key risks to be aware of include:
- Customer Concentration: A significant portion of revenue comes from three major customers, making the company susceptible to changes in their operational needs or contract renewals.
- Industry Cyclicality: The marine logistics and O&G sectors are inherently cyclical and can be affected by global energy prices and economic conditions.
- Operational Risks: Vessel utilisation rates, unexpected maintenance, and fluctuations in operating costs like fuel can impact profitability.
- Contract Renewal: While the order book is strong, future growth depends on the ability to consistently secure new contracts and renew existing ones at favourable rates.
Final Thoughts
From a professional standpoint, Avangaad’s Q2 2025 results are encouraging. The company has demonstrated its ability to operate efficiently and generate cash, which is the lifeblood of any business. The management’s forward-looking strategy appears sound, focusing on both strengthening its core business and seeking new growth avenues. The key challenge ahead will be to maintain this momentum and successfully execute its expansion plans in a competitive market.
What are your thoughts on Avangaad’s performance and its growth strategy? Do you think its three-phase plan is achievable in the current economic climate? Share your views in the comments below!
