Greetings, fellow investors and market enthusiasts! Today, we’re diving into the latest financial heartbeat of KINERGY ADVANCEMENT BERHAD (KAB) with their unaudited interim financial report for the First Quarter ended 31 March 2025. KAB, a prominent energy and engineering solutions provider, has just unveiled its performance, and it presents a mixed but largely encouraging picture of growth amidst evolving market dynamics.
The headline? KAB continues to demonstrate robust revenue and profit growth compared to the same period last year, showcasing its resilience and strategic progress in the sustainable energy sector. However, a closer look also reveals some quarter-on-quarter adjustments, which are crucial for a comprehensive understanding. Let’s unwrap the numbers and see what’s truly powering KAB’s journey.
Q1 2025 Financial Highlights: A Strong Year-on-Year Leap
KAB’s first quarter results for 2025 underscore a significant expansion in its operations when benchmarked against the same period in 2024. The group has managed to significantly ramp up its top-line revenue, which has naturally translated into healthy profit growth.
Revenue and Profit Soar Year-on-Year
Q1 2025
Revenue: RM68.57 Million
Profit Before Tax: RM7.03 Million
Profit for the Period: RM6.15 Million
Profit Attributable to Owners: RM6.25 Million
Basic EPS: 0.30 sen
Q1 2024
Revenue: RM42.04 Million
Profit Before Tax: RM5.21 Million
Profit for the Period: RM5.12 Million
Profit Attributable to Owners: RM4.97 Million
Basic EPS: 0.25 sen
As you can see, KAB’s revenue jumped by a remarkable 63.1% to RM68.57 million compared to RM42.04 million in Q1 2024. This substantial increase in sales funnelled down to the bottom line, with Profit Before Tax (PBT) rising by 35.0% to RM7.03 million. Net profit for the period also saw a healthy 20.2% increase, reaching RM6.15 million. More importantly for shareholders, profit attributable to owners of the company surged by 25.8% to RM6.25 million, leading to an improved basic earnings per share of 0.30 sen from 0.25 sen previously.
This impressive year-on-year growth signals strong execution and demand for KAB’s services, especially within its core segments.
Segmental Performance: Engineering and SES Leading the Charge
KAB’s business is primarily driven by two key segments: Engineering and Sustainable Energy Solutions (SES). Both segments have been instrumental in the group’s robust performance.
| Segment | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Revenue Change (%) | Q1 2025 Operating Profit (RM’000) | Q1 2024 Operating Profit (RM’000) | Operating Profit Change (%) |
|---|---|---|---|---|---|---|
| Engineering | 34,138 | 22,074 | 63.7% | 1,332 | 1,261 | 5.6% |
| SES | 34,280 | 19,860 | 62.5% | 8,460 | 5,939 | 42.5% |
The Engineering segment recorded a 63.7% increase in revenue to RM34.14 million, with its operating profit slightly improving by 5.6%. The Sustainable Energy Solutions (SES) segment, however, was the star performer, with revenue soaring by 62.5% to RM34.28 million and a significant 42.5% surge in operating profit to RM8.46 million. This highlights the growing demand for sustainable energy solutions and KAB’s strong position in capturing this market.
Quarter-on-Quarter Comparison: Project Progress Impacts
While the year-on-year figures are impressive, it’s also important to look at the immediate preceding quarter (Q4 2024) to understand the sequential trends. KAB’s revenue for Q1 2025 stood at RM68.57 million, which is a decrease of 13.6% compared to RM79.39 million in Q4 2024. Consequently, gross profit and profit before tax also saw declines of 31.9% and 9.7% respectively. The company attributes this quarter-on-quarter moderation to the natural progression of projects, where revenue recognition can fluctuate based on project milestones and completion stages. This is a common occurrence in project-based businesses and not necessarily a cause for alarm if the underlying pipeline remains strong.
Financial Health and Future Prospects
Beyond the income statement, KAB’s balance sheet and cash flow statement provide further insights into its financial health and strategic positioning for future growth.
Balance Sheet Overview
As of 31 March 2025, KAB’s total assets stood at RM494.33 million, a slight decrease from RM500.45 million at the end of 2024. Total equity, however, saw a modest increase to RM266.99 million from RM264.02 million. Net assets per share saw a minor dip to RM0.12 from RM0.13, primarily due to changes in non-controlling interests and foreign currency translation differences. The group’s borrowings, comprising both long-term and short-term facilities, total approximately RM180.59 million, indicating a reliance on debt for its growth initiatives, which is common for capital-intensive projects in the energy sector.
Cash Flow: A Positive Trend
One of the most encouraging aspects of the report is the significant improvement in cash flow from operating activities. KAB generated RM8.13 million in net cash from operations in Q1 2025, a substantial increase from RM2.10 million in Q1 2024. This indicates improved operational efficiency and better working capital management, which is vital for funding ongoing projects and future expansion without excessive external financing.
Strategic Outlook and Order Book Strength
KAB has clearly laid out its future plans, focusing on expanding its energy solutions, growing its customer base, replenishing its order book, and venturing into neighbouring ASEAN countries. These strategies are well-aligned with the global push for sustainable energy and infrastructure development.
A key indicator of KAB’s future revenue visibility is its robust order book. As of 31 March 2025, the group’s order book balance for Engineering and SES segments stands at approximately RM94 million and RM636 million respectively. Even more promising are the pending tenders, with approximately RM683 million for Engineering and a massive RM2,736 million for SES. This substantial pipeline of potential projects provides a strong foundation for sustained growth in the coming quarters and years.
The company’s commitment to being a “one-stop energy and engineering solutions provider” and its focus on helping clients optimize operational costs through energy efficiencies positions it well within the current economic climate where businesses are increasingly looking for sustainable and cost-effective solutions.
Summary and
KAB’s Q1 2025 report paints a picture of a company in a growth phase, driven by strong demand in the engineering and sustainable energy solutions sectors. The significant year-on-year increases in revenue and profit, coupled with a healthy cash flow from operations, are certainly positive indicators. While the quarter-on-quarter dip in performance highlights the lumpy nature of project-based revenue recognition, the substantial order book and pending tenders provide a strong outlook for future quarters.
The group’s strategic focus on expanding its energy solutions, customer base, and regional presence in ASEAN countries positions it well to capitalize on the growing demand for sustainable infrastructure. However, as with any investment, it’s prudent to consider potential risks and challenges:
- **Project Execution Risk:** The ability to successfully execute and complete large-scale projects on time and within budget is crucial for maintaining profitability, especially with the substantial order book.
- **Market Competition:** The energy and engineering solutions sector can be competitive, and KAB will need to continuously innovate and maintain its competitive edge to secure new projects.
- **Financing Costs:** While cash flow from operations improved, the group still carries significant borrowings. Fluctuations in interest rates could impact finance costs and overall profitability.
- **Economic and Regulatory Environment:** Changes in government policies, economic conditions, or regulatory frameworks related to renewable energy and infrastructure development in Malaysia and ASEAN could affect KAB’s operations and prospects.
- **Foreign Currency Translation Risk:** As KAB ventures into ASEAN, exposure to foreign currency fluctuations could impact its financial results, as seen with the negative foreign currency translation differences this quarter.
Overall, KAB appears to be navigating its growth path with a clear strategy and a strong pipeline of projects. The focus on sustainable energy solutions is timely and aligns with global trends. It will be interesting to see how they leverage their substantial tender pipeline into firm contracts and how they manage their expansion into new markets.
What are your thoughts on KAB’s latest performance? Do you believe their strategy for expanding into ASEAN and focusing on sustainable energy will continue to drive strong results? Share your insights in the comments below!
Disclaimer: This blog post is for informational purposes only and does not constitute financial advice. Always conduct your own due diligence and consult with a qualified financial advisor before making any investment decisions.
