Financials
Full Year Financial Statement And Dividend Announcement
Financials ArchiveUnaudited Condensed Interim Financial Statements For the Three Months and Full Year Ended 31 December 2023
Consolidated Statement of Comprehensive Income
Balance Sheet
Review Of Performance
Revenue
4Q FY2023
Group revenue continued to show signs of stabilization in the latest quarter under review.
While overall sales softened 27% Y-o-Y to S$73.5 million in 4QFY2023 from S$101 million in 4QFY2022, revenue improved about 3% Q-o-Q compared to sales of S$71.3 million recorded in 3QFY2023 - lifted by a much stronger performance of its Aerospace business as well as its Others segment.
Compared to 3QFY2023, the Group's Aerospace sales posted a 44% surge to S$7.4 million while sales in Others segment shot up by 108% to S$6.3 million. Semiconductor sales eased about 5% to S$59.8 million during the same period.
Compared to 4QFY2022, Aerospace sales jumped 78% on the back of a robust recovery in the global aviation industry in 4QFY2023 while semiconductor sales fell 29% and revenue in Others decreased by 48% respectively.
Sales in the Others segment slumped due to the weaker material and tooling distribution business which were affected by the general business slowdown.
The lower overall Semiconductor revenue was due to declines in both its Semiconductor Integrated System sales and Component sales.
While Semiconductor Integrated System sales dropped 31% from S$46.1 million in 4QFY2022 to S$32.0 million in 4QFY2023, it was comparable to 3QFY2023 revenue of S$33.3 million - easing by about 4%.
Component sales, which fell 27% from S$38.5 million in 4QFY2022 to S$28.0 million in 4QFY2023, was 6% lower than sales of S$29.7 million recorded in 3QFY2023.
Geographically, all the Group's key markets- except US and Others - posted lower revenue in 4QFY2023.
Revenue in US inched up 2% vs 4QFY2022 as a result of higher sales to Aerospace customers and revenue in Others leapt 52% due to the delivery of a water treatment system by Kalf Engineering.
Lower overall semiconductor sales saw Singapore's sales decline 29% as compared to 4QFY2022, while Taiwan revenue fell 60% mainly due to lower component spares sales.
Weaker material and tooling distribution demand also led to a 51% sales decline in Malaysia.
FY2023
Revenue in FY2023 fell 19% to S$299.9 million from S$372.4 million in FY2022 as sales in the Group's Semiconductor segment and Others segment decreased 19% and 51% respectively. The drop was cushioned by a 52% surge in Aerospace sales during the period under review.
Semiconductor Integrated System sales slid 8% to S$140 million in FY2023 from S$152 million in FY2022. Revenue from component sales decreased 27% from S$170.2 million to S$120 million during the same period.
Apart from a 1% sales improvement in the Others market, sales declined in all the Group's key geographical markets.
Compared to FY2022, revenue in Singapore, Malaysia, Taiwan and the US declined 18%, 56%, 34% and 2% respectively in FY2023.
Profitability
4Q FY2023
The Group's bottom line remained stable in 4QFY2023.
Gross material margin in 3QFY2020 remained relatively stable at 55.3% from 54.9% in 3QFY2019.
Group profit before tax eased just 9% to S$17.3 million in 4QFY2023 from S$18.9 million in 4QFY2022. Net profit and net profit attributable to shareholders edged down 2% and 3% to S$15.8 million and S$15.7 million respectively during the same period.
The Group's gross material margin improved to 52.8% from 46.5% in 4QFY2022 as a result of the renewal of its integrated system contract and reversal of inventory provisions.
The Group also trimmed its costs. Personnel costs fell 6% mainly due to lower bonus provisions and depreciation and other expenses which shrank 18% and 8% respectively.
Other charges were also slashed by 63% mainly due to lower exchange loss, reduced fair value inventory adjustment arising from acquisition of a subsidiary and reversal of project loss provision.
Income tax expenses also dropped 48% due to adjustment in deferred tax provision.
FY2023
The Group posted lower profit in FY2023.
Net profit before tax declined 34% to S$68.5 million when compared to S$103.2 million in FY2022 while net profit and net attributable profit fell 40% and 39% to S$61.2 million and S$60 million respectively.
The decrease in profit was due to lower revenue as well as higher expenses. Depreciation expenses increased 15% mainly due to fixed asset additions. Other expenses also rose 13% as upkeep of machinery cost went up 16% vs last year - arising from more maintenance work while utilities jumped 38% mainly due to the implementation of ICPT (Imbalance cost past-through) in Malaysia. The Group also recorded a one-off reversal of tax-penalty provision for one of its Malaysian subsidiaries in FY2022.
Gross material margin in FY2023 improved to 50.1% from 49.9% in FY2022.
Commentary
The Group delivered a good set of results in FY2023 following an exceptional growth year of historic highs in FY2022.
Despite persistent inflationary pressures, intensifying geopolitical tensions and market uncertainties, the Group's topline performance stayed around S$300 million and it generated nearly S$79.8 million in operating cash flow and about S$51.1 million of free cashflow.
The Group's performance also reflects the success of its diversification strategy - as its Aerospace business continued to report robust growth, moderating the impact of the global semiconductor slowdown.
The Group's new production facilities in Penang are completed and one of the new factories is now operational. As it has commenced production for its new customer, it expects an uptick in order flow in the coming months.
The Group successfully completed a placement of 40 million new shares recently, raising gross proceeds of about S$50 million.
The placement will position it well to capture the myriad of new opportunities in both the semiconductor and aerospace sectors.
According to SEMI, while there was a temporary contraction in 2023 due to the cyclical nature of the semiconductor market, semiconductor manufacturing equipment growth is expected to resume in 2024, with sales forecast to reach a new high of $124 billion in 2025, supported by both the front-end and back-end segments.1
In its latest quarterly World Fab Forecast report, SEMI has also predicted global semiconductor capacity to increase 6.4% in 2024 to top the 30 million wafers per month (wpm) mark for the first time after rising 5.5% to 29.6 wpm in 2023.2
IATA expects global revenue passenger kilometres (RPK) to grow 9.8% in 2024, rising 4.5% above 2019 levels.
All this is based on a projected 4.7 billion air passengers in 2024, 9% more than the 4.5 billion in 2019.3
Looking ahead, the Group's strong fundamentals and financial position will enable it to capitalize on these growth trends to deliver sustained positive returns to shareholders. The Group remains confident of future prospects, and will continue to make investments across its key business segments to support its long-term growth plans.
In view of the Group's robust performance in FY2023, the Board decided to reward shareholders with a higher final dividend of 2.2cents, up from 2 cents in the previous corresponding period.
Barring unforeseen circumstances, the Group expects to remain profitable in FY2024.