Kelington Group Berhad (KGB, 0151), a company with billions worth of contracts, recently announced its outstanding quarterly performance. Despite the ongoing semiconductor industry downturn, KGB managed to achieve record-high revenue and profits.

Without further ado, let's delve into the latest performance of KGB.

Revenue Comparison (YoY +36.01%, QoQ +37.54%)

As of June 30th (Q2FY2023), the company's revenue stood at approximately RM424.91 million, marking an increase of around 36.01% compared to the same period last year, which was about RM312.40 million. The Ultra High Purity (UHP) business segment continued to be the primary revenue driver, accounting for approximately 68.08% of the total revenue. The revenue from the UHP division grew by around 50.84% YoY to approximately RM289.28 million, benefiting from contributions in key markets such as Singapore, China, and Malaysia.

The revenue performance of the Process Engineering business segment was also impressive, showing a YoY increase of about 121.72% to approximately RM25.57 million. This growth was attributed to the completion of a Malaysian process engineering project awarded in the fourth quarter of 2022.

Furthermore, the Industrial Gases business segment also experienced a YoY increase of around 146.37% in revenue for the quarter, reaching approximately RM28.71 million. This increase was driven by the rising demand for liquid carbon dioxide (LCO2) from both domestic and overseas markets.

In terms of geographical distribution, the company's main market revenues came from Malaysia, accounting for about 42.01% of the total revenue for this six-month period. This followed by Singapore (36.52%), China (16.84%), and Taiwan (2.10%).

Comparing to the subdued previous quarter influenced by the Lunar New Year festivities, the company's revenue exhibited a robust growth of approximately 37.54%.

Net Profit Comparison (YoY +40.56%, QoQ +17.72%)

Thanks to the robust operational revenue across KGB's business segments, the company achieved a historic net profit of approximately RM19.06 million for the quarter, marking significant growth both YoY and QoQ.

However, there has been a change in the company's net cash position, transitioning from a positive net cash balance of RM14.90 million in Q2FY2022 to a negative balance of RM7.40 million in Q2FY2023, primarily due to debt repayment and working capital utilization. Consequently, the company's total debt decreased from RM254.00 million in the same period last year to RM187.10 million.

Outlook

The prospect for the company's Industrial Gases business remains robust as the demand for liquid carbon dioxide is expected to rise with the recovery of economic activities. Additionally, the export demand for liquid carbon dioxide from Oceania countries further supports this growth. Furthermore, the upcoming expansion of the second liquid carbon dioxide plant in Kerteh is projected to double production capacity and significantly enhance the financial performance of the Industrial Gases segment, starting from the fourth quarter of 2023.

Moreover, the commencement of an on-site gas supply scheme to provide hydrogen, nitrogen, and oxygen to a semiconductor giant in Kulim, Kedah, is expected to contribute positively to the company's sustained income over the next decade.

It's worth noting that the company secured new contracts totalling RM744.00 million in the first half of 2023. Including carried-forward projects, the company's total order book stands at RM2,440.00 million, of which RM1,770.00 million remains outstanding.

In conclusion, the management remains confident in achieving a commendable financial performance in the fiscal year 2023. With a current price-to-earnings ratio (P/E ratio) of around 13.73 times, what are your thoughts on KGB, dear readers?