Business Description
TEHO International Inc. Ltd. (“TEHO” or “the Group”) is a multi-faceted solutions provider, primarily serving the Marine & Offshore and Property Development industries. Established in 1986, TEHO has expanded its operations from a local rigging and mooring business into an international marine solutions provider and property developer. The Group operates through the following core segments:
- Marine & Offshore Segment: This segment focuses on rigging, mooring, lifting, and safety systems. It serves the shipping, oil & gas, and construction sectors, with major operations in Southeast Asia, EMEA, the Americas, China, and Korea.
- Property Segment: The Group is involved in property development and consultancy, primarily focused on the Singapore market. This business line includes the development of residential, commercial, and mixed-use projects.
Geographic Footprint: TEHO has expanded its marine operations globally, with key logistics points in Singapore, the U.S., Europe, and China, alongside a growing property development presence in Singapore.
Industry Position and Competitive Landscape
TEHO operates within two primary industries: Marine & Offshore, and Real Estate. In the Marine sector, the Group competes with other international marine suppliers. Its competitive advantage lies in a robust inventory, quick turnaround times, and technical expertise in compliance with industry regulations. The Property segment, however, faces significant competition from local developers and consultancy firms in Singapore.
Key Financial Overview (FY2024)
- Revenue: S$60.4 million, down by 14.6% from FY2023 due to a decline in Marine & Offshore revenues and absence of a major property sale.
- Gross Profit: S$22.5 million, representing a slight decrease of 4.5%, with an improvement in gross profit margin to 37.3%.
- Profit Before Tax: S$1.6 million, a significant drop from S$3.5 million in FY2023.
- Net Profit: S$0.9 million, down from S$2.8 million in FY2023.
- Dividend: The company declared a first and final dividend of 0.1 Singapore cents per share.
Revenue Streams and Customer Base
- Marine & Offshore: Revenue for this segment decreased by S$4.5 million in FY2024 due to lower contributions from the mooring and rigging business.
- Property: A sharp decline in property segment revenue (down 84.1%) was mainly due to the absence of a semi-detached property sale in FY2024.
TEHO’s customer base is diverse within the Marine & Offshore sector, serving shipping companies and oil & gas players across major global ports. The property segment caters to high-end residential and commercial property investors in Singapore.
Financial Statement Analysis
1. Income Statement
- Revenue: The Group experienced a decrease in overall revenue due to softer demand in the Marine & Offshore sector and the absence of significant property sales.
- Profitability: Profit margins have been pressured due to lower revenue and increased operating costs (administrative expenses rose by 5.3% due to manpower cost adjustments).
2. Balance Sheet
- Assets: Total assets decreased to S$55.4 million from S$57 million in FY2023. A notable reduction was seen in current assets, particularly cash, which fell from S$8.1 million to S$6.6 million.
- Liabilities: Total liabilities decreased, driven by repayment of loans and lease liabilities. The Group’s debt-to-equity ratio stands at 0.77, reflecting a healthier financial position.
3. Cash Flow Statement
- Operating Activities: Net cash generated from operating activities was S$4.0 million, down from S$12.5 million in FY2023. The drop was primarily due to higher inventory levels and lower property sales.
- Investing Activities: Net cash used in investing activities remained low at S$0.1 million, attributed to capital expenditures and purchases of keyman insurance.
- Financing Activities: The Group used S$5.4 million in financing activities, mainly for loan repayments and dividend payouts.
Key Findings and Investor Considerations
Strengths:
- Global Presence and Diverse Revenue Streams: TEHO’s international footprint in the Marine & Offshore sector offers resilience against localized downturns.
- Improved Gross Margins: Despite declining revenues, the Group managed to improve its gross profit margin to 37.3% in FY2024, showcasing cost control.
- Dividend Payment: A declared dividend reflects the company’s intention to return value to shareholders despite challenging conditions.
Risks:
- Decreased Profitability: The significant drop in profit from S$2.8 million in FY2023 to S$0.9 million in FY2024 indicates operational headwinds.
- Decline in Revenue: Both the Marine & Offshore and Property segments are facing declines, particularly the Property segment, where revenues fell drastically.
- Economic Uncertainty: The company is navigating a challenging global environment, with disruptions from geopolitical tensions and a slowdown in the real estate market in Singapore.
Recommendations
For Existing Shareholders:
- Hold: TEHO’s financials indicate that while the company faces short-term challenges, its global operations in the Marine sector and cost controls could lead to recovery, especially if economic conditions improve. The company continues to provide dividends, which adds a level of return despite the volatility.
For Potential Investors:
- Wait and Watch: Given the decline in profits and uncertain revenue recovery, it may be prudent to monitor the company’s performance over the next few quarters before making an investment. The global economic environment remains volatile, and significant improvements in revenue or profitability may take time.
Disclaimer
The above recommendations are based on the financial performance as reported in TEHO International Inc. Ltd.’s FY2024 Annual Report. Investment decisions should be made based on thorough analysis and consultation with a financial advisor.
