Greetings, fellow investors and market watchers!
Today, we’re diving into the latest financial performance of **Avangaad Berhad** (formerly known as E.A. Technique (M) Berhad) for its first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s trajectory, especially after successfully navigating its PN17 status. While the numbers show a dip in profit compared to the same period last year, there are strong underlying operational improvements and a clear path forward that warrants a closer look.
So, let’s break down the key figures and strategic moves that define Avangaad’s recent quarter.
Q1 2025: A Mixed Bag with Promising Undercurrents
Avangaad Berhad’s first quarter results present a nuanced picture. While revenue saw a slight decline compared to the previous year, the company demonstrated resilience and strategic agility, particularly in improving operational efficiency.
Year-on-Year Performance (Q1 2025 vs. Q1 2024)
When comparing the current quarter to the same period last year, we observe a contraction in key top-line and bottom-line figures. The primary reason cited by the company for this lower performance is the “idle time between the end of existing contracts and the commencement of new contracts for the fast crew boats.” This highlights the lumpy nature of contract-based businesses.
Q1 2025
Revenue: RM29.97 million
Profit Before Tax (PBT): RM5.44 million
Profit for the Period: RM4.65 million
Basic Earnings Per Share (EPS): 0.35 sen
Q1 2024
Revenue: RM31.20 million
Profit Before Tax (PBT): RM6.89 million
Profit for the Period: RM6.89 million
Basic Earnings Per Share (EPS): 1.30 sen
Revenue decreased by 4%, PBT by 21%, and net profit by 32% compared to Q1 2024. Basic EPS also saw a significant reduction from 1.30 sen to 0.35 sen, primarily due to the lower profit and an increased weighted average number of shares in issue (from 530.5 million to 1,326.25 million shares).
Quarter-on-Quarter Performance (Q1 2025 vs. Q4 2024)
Looking at the immediate preceding quarter (Q4 2024) provides a different perspective, showcasing operational improvements and the impact of one-off items.
Q1 2025
Revenue: RM29.97 million
Profit Before Tax (PBT): RM5.44 million
Profit for the Period: RM4.65 million
Q4 2024
Revenue: RM29.30 million
Profit Before Tax (PBT): RM31.00 million
Profit for the Period: RM25.17 million
Revenue actually saw a modest 2% increase from the preceding quarter, driven by a “higher utilisation rate on the fast crew boats.” However, PBT experienced a substantial 82% decrease. This significant drop is attributed to “claims from customer and insurance in the preceding quarter,” indicating that Q4 2024 benefited from one-off gains that were not present in Q1 2025.
Business Segment & Financial Health
Avangaad operates predominantly in a single reportable segment: vessel charter hire. This involves operating marine vessels for oil and gas transportation and offshore storage, as well as providing port marine services. The report highlights a growing customer concentration, with three external customers now contributing 68% of total revenue (up from two customers contributing 41% in Q1 2024).
From a financial health perspective, the balance sheet shows stability and improvement in cash management:
- Cash and Cash Equivalents: A healthy jump to RM45.49 million as at 31 March 2025, from RM19.13 million at 31 December 2024. This significant increase is largely due to robust cash generation from operating activities.
- Net Cash from Operations: A remarkable improvement, generating RM32.03 million in net cash from operating activities for the period ended 31 March 2025, compared to RM6.27 million in the same period last year. This is a strong indicator of operational efficiency and effective working capital management.
- Total Equity: Steadily increased to RM296.89 million, up from RM291.95 million at the end of 2024, reflecting the retained earnings.
- Loans and Borrowings: Slightly reduced to RM85.66 million from RM88.96 million, indicating prudent debt management.
Risks and Prospects: Navigating the Waters Ahead
The maritime and oil & gas support services sector is dynamic, and Avangaad is actively positioning itself for future growth while managing inherent challenges.
Future Prospects
The outlook for Avangaad is bolstered by its healthy order book and strategic initiatives:
- Strong Order Book: The Group’s order book stands at RM141.7 million, with an additional RM214.6 million for extension periods. This provides a significant revenue pipeline for the coming years.
- New Contracts Secured: Avangaad has successfully secured three new contracts for the Provision of Fast Crew Boats (FCB) in Q1 2025, collectively valued at approximately RM29.19 million for their initial periods. These contracts are expected to contribute positively to the Group’s earnings and net tangible assets for the financial year ending 31 December 2025.
- Operational Focus: The company is committed to improving operational efficiencies, maximizing vessel utilization rates, implementing cost savings through strategic procurement, ensuring contract extensions, and practicing effective cash management.
- Business Development: Avangaad is continuously seeking new business opportunities and contracts to ensure earnings stability and cash flow certainty.
Key Developments & Challenges
A significant highlight for Avangaad Berhad is its successful exit from the PN17 status on 20 February 2025. This marks a crucial milestone, signifying that the company has regularized its financial condition following a comprehensive regularization plan. This development should restore investor confidence and provide a more stable foundation for future operations.
Despite this positive development, the company still faces challenges, as evidenced by the “idle time” between contracts impacting the recent quarter’s revenue. Customer concentration also remains a factor to monitor, as a large portion of revenue is derived from a few key clients. The company’s ability to secure and maintain high utilization rates for its fleet will be critical for sustained profitability.
Summary and
Avangaad Berhad’s Q1 2025 results reflect a period of transition and operational adjustments. While the year-on-year profit decline was notable, largely due to temporary “idle time” for its fast crew boats, the quarter-on-quarter revenue growth and strong cash flow generation from operations are encouraging signs of underlying business health and improved efficiency. The successful upliftment from PN17 status is a monumental achievement, signaling a significant de-risking for the company and a testament to its successful debt restructuring and regularization efforts.
The new contracts secured and the robust order book provide a clear runway for future revenue and earnings. The company’s strategic focus on maximizing vessel utilization, cost containment, and active pursuit of new opportunities positions it well to capitalize on the improving market conditions in the maritime and oil & gas support services sector.
However, potential investors should remain mindful of:
- The inherent cyclicality and contract-dependent nature of the vessel charter hire business, which can lead to fluctuations in revenue and profit due to “idle time.”
- The concentration of revenue among a few major customers, which could pose a risk if any of these contracts are not renewed or are terminated.
- The need for sustained operational efficiency and aggressive pursuit of new contracts to ensure consistent growth post-regularization.
Overall, Avangaad appears to be charting a steady course forward, having successfully addressed its financial challenges and now focusing on operational excellence and growth. The path ahead will depend on its ability to execute its strategies effectively and navigate the competitive landscape.
What are your thoughts on Avangaad’s latest performance and its future prospects? Do you believe the company can maintain its operational momentum and secure more long-term contracts? Share your insights in the comments below!
