PETALING JAYA: Frontken Corp Bhd
expects its oil and gas (O&G) business to be strong for the remaining months in 2022 due to increased orders from various contracts.
In a filing with Bursa Malaysia yesterday, the group said the contracts will be for the provision of manpower supply and also mechanical rotating equipment services and parts that the company has with the PETRONAS group of companies.
“Amidst the promising business developments, we are cautiously optimistic that our performance in 2022 will be good and we are very excited with what lies ahead of us,” it said.
Frontken’s net profit for its third quarter ended Sept 30, 2022 rose to RM34.73mil from RM27.30mil in the previous corresponding period, while revenue in the third quarter improved to RM134.57mil from RM116.59mil a year earlier.
Basic earnings per share stood at 2.21 sen, compared with 1.74 sen previously.
Frontken said its Taiwan semiconductor business continued to benefit from the higher demand in the semiconductor space.
“The improvement in the group’s local business was largely due to pick-up in orders for its maintenance and repair services of mechanical rotating equipment and manpower supply through its various contracts that it has with PETRONAS group of companies.
“Our engineering division in Singapore also saw an increase in its activities partly attributable to the improvement in the O&G industry.”
Despite having to pay a withholding tax of RM1.9mil imposed on the dividend declared by its Taiwan subsidiary, Frontken said net profit improved as a result of improved revenue and better profit margin resulting from the continual efforts to improve efficiency across the group.
“If we were to remove the withholding tax impact, for a like-for-like comparison, the current quarter net profit would have been RM40mil compared to RM30mil achieved in the preceding year’s corresponding quarter.”
For the nine-months period ended Sept 30, 2022, Frontken’s net profit grew to RM93.45mil from RM74.96mil in the previous corresponding period, while revenue improved to RM381.91mil from RM328.74mil a year earlier.
Frontken noted that the World Semiconductor Trade Statistics (WSTS) has re-calculated its semiconductor market forecast in August 2022, where the global semiconductor market is expected to increase 13.9% in 2022 instead of 16.3% forecasted in May 2022.
“Despite the revised forecast, WSTS expects the global semiconductor market to grow further in 2023.
“While the semiconductor industry is seeing demand cringes as inventory adjustments continue in the customer electronics sector and macroeconomic growth slows, one of our major customers in Taiwan expects the end market demand to weaken and customers’ ongoing inventory adjustment will be balanced by continued ramp-up for their industry-leading advance technologies.”
Additionally, Frontken said the persistent demand of chips will be positive for its semiconductor business in years to come, where continuing high demand for the same will necessitate more chip research, design and manufacturing in the years ahead.
