Hello fellow Malaysian investors! Today, we’re unrolling the latest financial scroll from Elridge Energy Holdings Berhad (EEHB), a significant player in the sustainable energy landscape. Incorporated in 2024, Elridge Energy, through its subsidiary Bio Eneco Sdn Bhd, specializes in manufacturing and trading biomass fuel products, particularly Palm Kernel Shells (PKS) and wood pellets – key components for electricity generation and industrial boilers. Their unaudited interim financial results for the second quarter ended 30 June 2025 have just been released, and they paint a compelling picture of a company charting a course for growth.

From a strong half-year profit surge to ambitious capacity expansion, there’s much to unpack. The headline? Elridge Energy has posted a commendable 14.8% increase in half-year net profit, reaching RM26.01 million. This impressive growth, coupled with strategic investment plans, positions the company well within the expanding biomass energy market. Let’s dive into the numbers and strategic insights.

Half-Year Highlights: Steady Growth Fuels Optimism

Elridge Energy demonstrated robust performance over the first half of 2025. The company’s strategic focus on biomass fuel products continues to yield positive results, reflected in solid revenue and profit growth compared to the same period last year. Oliver Yeo, Elridge Energy’s Executive Director and CEO, highlighted this, stating, “Our second quarter performance underscores the resilience of our operations and the sustained demand for biomass fuel products across our key export markets.”

For the first six months of FY2025, revenue saw a commendable 12.2% increase, rising to RM213.81 million from RM190.59 million. This growth translated into a substantial 15.6% improvement in profit before taxation to RM34.57 million, and a 14.8% improvement in net profit, reaching RM26.01 million, up from RM22.66 million in the prior year’s corresponding period. Earnings per share also climbed by 15.0%, reflecting this positive trajectory.

Q2 2025: A Snapshot of Quarterly Performance

While the half-year figures shine brightly, let’s examine the performance for the second quarter specifically. Elridge Energy recorded a marginal increase in revenue and improved profitability compared to the second quarter of the previous year.

Revenue for Q2 2025 slightly edged up by 0.8% to RM104.14 million from RM103.30 million. Profit before tax grew by 6.8% to RM16.54 million, and net profit increased by 6.2% to RM12.43 million. This indicates steady, albeit modest, year-on-year quarterly growth, showcasing the group’s ability to maintain a healthy bottom line.

Business Unit Performance: PKS Remains the Powerhouse

Elridge Energy operates primarily in the manufacturing and trading of biomass fuel products. The breakdown of revenue by product highlights the continued dominance of Palm Kernel Shells (PKS), which are agricultural waste products from palm oil milling used as a solid biomass fuel.

PKS contributed a significant RM89.25 million (85.7% of total revenue) in Q2 2025, showing a marginal increase from RM88.99 million in Q2 2024. Wood pellet sales also saw a 4.1% increase to RM14.89 million. Oliver Yeo emphasized this, noting, “Palm Kernel Shells (“PKS”) continued to anchor our business, contributing RM89.25 million or 85.7% of revenue in Q2 2025, broadly consistent with RM88.99 million or 86.2% a year ago. This stability highlights the strong fundamentals of our core product line, complemented by RM14.89 million in wood pellet sales.” This dual-product strategy, heavily weighted towards PKS, underscores the resilience and strong market demand for these sustainable energy sources from customers in Japan, Indonesia, Malaysia, and Singapore.

Closer Look: Q2 2025 vs. Immediate Preceding Quarter (Q1 2025)

While the year-on-year growth is positive, it’s also insightful to compare the current quarter with the immediate preceding quarter. The group experienced a slight sequential dip in Q2 2025.

Financial Health: A Strong Balance Sheet and Strategic Cash Management

Elridge Energy’s balance sheet reflects a healthy financial position and strategic capital management to support its growth initiatives.

• Total Assets surged to RM328.48 million as of 30 June 2025, up from RM266.41 million at the end of FY2024.
• Total Equity also saw a robust increase to RM200.71 million (FY2024: RM174.70 million).
• Net assets per share improved from 8.73 sen to 10.04 sen.

The group’s cash and bank balances significantly increased to RM152.63 million from RM109.41 million at the end of 2024. This strong cash position is further bolstered by cash and cash equivalents, which grew to RM205.28 million at the end of Q2 2025 from RM162.00 million at the beginning of the financial period. This impressive cash build-up is largely driven by financing activities, including substantial drawdowns from various borrowings such as bankers’ acceptance and trust receipts. While total borrowings increased to RM92.74 million, this appears to be a strategic move to fund the planned capacity expansion, which is essential for capturing future market demand.

However, it’s worth noting that net cash generated from operating activities for the half-year decreased to RM2.32 million from RM5.31 million in the corresponding period last year. This was influenced by changes in working capital, particularly higher inventories and other receivables, alongside increased tax payments. While operating cash flow is an important metric to watch, the overall cash position remains strong due to financing activities.

Strategic Vision: Expansion and Market Growth

Elridge Energy is not resting on its laurels. The report clearly outlines a forward-looking strategy focused on expanding its production capacity to meet burgeoning demand, especially from foreign customers seeking long-term supply contracts. Oliver Yeo affirmed, “With revenue growth maintained and earnings improved year-on-year, we remain on track in delivering on our growth commitments post-listing.”

Capacity Expansion on Track

A significant portion of the IPO proceeds (approximately RM68.14 million) is earmarked for the construction of new PKS production facilities. The plans include:

• Setting up new factories in Pasir Gudang, Johor, and Kuantan, Pahang, expected to be completed by the end of FY2025.
• A new facility in Lahad Datu, Sabah, anticipated for completion by the financial year ending 2026.
• Each new factory will be equipped with two PKS production lines, adding an estimated annual capacity of 240,000 metric tonnes once fully operational.

As Oliver Yeo explained, “This will strengthen our ability to secure long-term export contracts and enhance our role in the regional biomass supply chain.” This expansion is critical for the group to secure new, larger contracts and solidify its position in the regional biomass supply chain.

Favourable Industry Outlook

The market trends for biomass fuel products provide a strong tailwind for Elridge Energy’s growth ambitions, driven by increasing global demand for renewable energy:

• The PKS industry in Asia Pacific is projected to grow at a Compound Annual Growth Rate (CAGR) of 8.9% from an estimated USD308.6 million (RM1.4 billion) in 2024 to USD366.1 million (RM1.7 billion) in 2026.
• The wood pellet industry in Asia Pacific is also forecast for robust growth, with a CAGR of 8.6% from USD10.6 billion (RM48.4 billion) in 2024 to USD12.5 billion (RM57.1 billion) in 2026.

These projections underscore the increasing global shift towards renewable energy sources, positioning Elridge Energy in a favourable market environment. The company remains cautiously positive about achieving satisfactory financial performance for the financial year ending 31 December 2025.

Utilisation of IPO Proceeds

The report details the utilisation of the RM101.5 million gross proceeds from the company’s IPO in August 2024. As of YTD Q2 2025, RM37.75 million has been utilised, with RM63.76 million remaining for strategic investments. A key highlight is the reallocation of a RM0.59 million surplus from estimated listing expenses to general working capital, demonstrating prudent financial management.

Navigating the Challenges

While the outlook is positive, a diligent investor always considers potential challenges. Elridge Energy noted a higher effective tax rate of 24.84% for Q2 2025 (compared to the statutory tax rate of 24.00%). This was mainly attributed to unrealised foreign exchange losses, which are non-deductible expenses. Investors should continue to monitor the impact of foreign exchange fluctuations on the group’s profitability.