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Eneco's 18 Month Turnaround: Profitability and Diversified Growth · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive. We're here to cut through the noise and give you a
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  clearer view of what's really going on in business.
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  Today, we're zoning in on Enico Energy Limited, EEL for short.
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  Our plan is to really dig into their latest financials, specifically for that
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  18-month period ending June 30, 2025.
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  We want to get beyond just the numbers, understand why they look this way.
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  And maybe more crucially, what's their game plan looking ahead?
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  And right out of the gate, the headline from their press release kind of sets the tone, doesn't it?
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  Enico's turnaround gains momentum, delivers profitability for the period under
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  review. That's pretty positive.
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  It definitely frames it positively, yeah. Yeah. But as we dive in,
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  you'll see we're juggling a few different comparison periods.
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  You've got this 18-month view versus a previous 12-month one,
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  and then these six-month snapshots.
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  So we need to be, let's stay careful about how we compare things.
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  We'll make sure to point out what's a direct comparison and what's more directional.
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  We can lean on the annualized comments they provide to get a feel for the underlying trends.
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  That way we don't get tripped up by the different time windows. Right. Makes sense.
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  OK, so let's unpack this, starting with the most recent short-term view.
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  Looking at the six months ending June 30, 2025, compared to the same time in
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  2024, what jumps out first on the revenue line?
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  OK, so straight away you see a pretty healthy 9% rise in revenue,
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  but up to $16.4 million from S15.1 zirian dollars.
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  And the interesting bit is why. The report says it was driven by higher volume
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  in sea freight forwarding, transportation, warehousing, and supply chain services.
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  So that really underlines the ongoing strength in their core logistics arm,
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  Richland Logistics Services. That's their bread and butter.
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  There was a bit of an offset. They mentioned a reduced full container load activity,
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  but the overall direction for the core business.
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  Definitely, yeah. Okay, a solid increase there. Yeah. What about other income?
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  Sometimes that tells a story about their sort of side hustles or ancillary stuff. Did that grow too?
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  Ah, interestingly, no. Other income actually dipped a bit, down to $0.64 million
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  from C100.75 million dollars.
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  The reasons given are mainly due to lower interest income from fixed deposits
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  and fewer third-party IT services.
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  And crucially, they note no government grants were received during the period.
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  Those had helped in the past.
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  So it's a mix of things, but probably not a major worry given the main revenue
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  growth. Got it. Now, the big one for any turnaround story costs.
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  How did Enico do on managing operating expenses in this period?
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  This is where you see some real discipline kicking in. Total operating expenses
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  actually decrease slightly.
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  Think about that slight decrease, even with more business, down to $16.05 million
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  from S16.16 million dollars.
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  And it's not just a minor thing. When you look closer, you see specific moves.
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  Sure, service costs went up because of higher subcontractor expenses tied to the volume increase.
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  Makes sense. But look at salaries and employee benefits.
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  They declined quite a bit. The report says this reflects headcount reductions and bonus reversals.
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  That's pretty clear cost management right there. You also saw finance costs
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  drop a bit with lower lease obligations and other operating expenses down mainly
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  from less spending on consultants.
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  So, yeah, it's a detailed picture, but the overall trend on cost control looks positive.
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  OK, so revenue up, costs slightly down. What's the final verdict for this six
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  month snapshot? Did they actually turn it around?
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  They absolutely did. This is the headline confirmed, really.
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  A return to profit. See $0.99 million before tax and after tax,
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  a net profit of $0.82 million.
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  Compare that to the prior period, a net loss of $0.41 million.
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  That's a huge swing. The press release bangs the drum about a 301% change in
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  net profit. And yeah, it is remarkable. Shows a real shift in how they're operating.
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  Oh, and worth mentioning, no discontinued operations in either period.
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  So it's a clean comparison.
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  That short-term view is genuinely impressive. Now, here's where it gets,
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  as you said, really interesting.
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  Let's zoom out. The 18-month period ending June 30, 2025 versus the 12 months
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  ending December 31, 2023.
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  Remembering, like you said, it's directional, not perfectly comparable year-on-year,
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  but we'll use those annualized notes. So over this longer time frame,
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  what was the revenue story?
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  Well, over this extended 18 months, revenue jumped a massive 55%.
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  It hit S47.47 million dollars, up from $30.56 million.
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  That's a huge increase, and it clearly shows expanded activity across sea freight
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  forwarding, transportation, warehousing, and supply chain services throughout 2024 and early 2025.
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  So not just a blip, but sustained growths in that core logistics business.
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  And did other income keep pace over the 18 months? It did, yeah.
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  Other income rose significantly too, up 63% to S2.38 million dollars from S1.46 million dollars.
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  This was apparently mainly due to higher third-party IT services and government
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  grants received over that longer period.
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  There were some offsets, like lower interest income again, but the report says
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  the increase reflects both improved ancillary income streams and a longer reporting window.
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  Makes sense. They're growing other streams too. Okay, now let's tackle operating
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  expenses for this longer view.
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  The total number obviously went up a longer period, more activity,
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  but what's the real story on cost management over these 18 months.
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  Right. And this is exactly where that annualized context is,
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  well, absolutely vital.
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  Yes, the total figure, S49.16 million dollars, is way up from S31.54 million
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  dollars, but that's 18 months versus 12, plus more business.
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  The key insight they provide is that the monthly cost run rate remains stable,
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  pointing to cost efficiency gains.
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  So when you annualize the main expense lines, most actually show slight reductions
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  or very tight control, even with all that extra activity. It's pretty impressive, actually.
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  Break that down a bit. Like, what about service costs? Sure.
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  So service costs and related expenses, the annualized cost actually showed a marginal reduction.
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  They put this down to improved subcontractor cost controls and lower diesel
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  prices in the latter part of the period.
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  That's real. Dash salaries must have gone up with more business.
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  The total did, yes, to S21.78 million dollars. But again, annualized,
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  it's $14.52 million, a slight decrease from the previous period's annualized run rate.
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  And this is despite, as they say, a higher average workforce.
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  So it points to cost optimization efforts, including headcount management and
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  more disciplined bonus provisioning.
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  Their managing personnel costs tightly. Okay.
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  But you mentioned some costs did jump significantly, even annualized depreciation
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  in finance costs. Exactly.
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  Depreciation in amortization nearly doubled to $7.15 million.
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  And finance costs shot up to S1.05 million from just S0.25 million.
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  But there's a clear reason. The depreciation is due primarily to lease renewals
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  in late 2024 and new right-of-use assets added in 1H 2025.
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  Basically new and renewed warehouse leases. Same story for finance costs,
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  largely due to higher lease liabilities linked to renewed and expanded warehouse leases.
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  So these are expected time-based increases tied to strategic growth,
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  leasing more space to handle more business, not necessarily runaway spending.
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  Right. Structural costs tied to growth. Makes sense.
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  So factoring all that in, revenue growth and this managed cost picture,
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  what did profitability look like over the full 18 months? Did the short-term turnaround hold?
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  Well, it held, yes, but the numbers are more modest over the longer stretch.
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  They reported a profit before tax of $7.68 million for the 18 months.
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  That is up 41% from the $7.68 million profit in the prior 12-month period. So growth.
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  Net profit landed at $7.10 million.
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  That's just slightly above the several $0.08 million recorded in FY 2023.
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  We need to remember, though, no discontinued ops in this period.
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  The prior 12 months did have a small gain from selling their Indonesian business.
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  So if you look at just the ongoing business, the trend is positive.
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  Even if the final net profit figure over 18 months isn't huge,
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  it's still profit and it's growing from core ops. Okay, that clarifies the profit picture.
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  So pulling it all together, what does this mean for the company's actual financial health?
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  Let's look at the balance sheet, June 30, 2025 versus end of 2023.
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  What's happening with current assets? Current assets are up by S$2.39 million.
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  Hitting S$25.61 million.
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  And the drivers are pretty clear. A big chunk of that is a S$1.68 million increase
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  in cash-in-cash equivalents.
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  That came from positive operating cash flow, which we'll get to,
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  and also money from warrants being exercised.
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  Plus, trade receivables rose by about $3.76 million, which just reflects the
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  higher sales activity, so healthy signs and working capital.
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  And the longer-term assets, non-current.
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  Those grew, too, by, yes, $3.58 million to $7.84 million.
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  And the main reason here was that a $3.95 million increase in right-of-use assets,
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  again, that's those renewed and new leases for warehouses and facilities,
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  offset a bit by depreciation.
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  It shows them expanding their operational base. Right.
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  Okay, flipping over to liabilities, what happened there? Must have increased with the leases.
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  Thought on. Liabilities did increase. Current liabilities were up S3.53 million
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  dollars and non-current up by 6.71 million dollars.
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  And yes, it's largely reflecting a rise in current lease liabilities as older
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  leases get closer to maturity and new ones are added. Same for the non-current side.
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  It mirrors the increase we saw in the right-of-use assets. It's the other side of the leasing coin.
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  So assets up, liabilities up, but net assets still rose to S21.84 million dollars.
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  That's right. Rose from a six twenty point one one million dollars.
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  And that increase reflects two main things. The profit they accumulated over
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  the 18 months, however modest, and the higher share capital because warrants were exercised.
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  So overall, the company's net worth, its equity base has grown.
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  They're building value. OK, let's pivot to cash flow now. Again,
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  18 months ending June 2025 versus the 12 months ending to said 2023.
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  That cash from operations figure looks really strong.
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  Net cash generated from operating activities was nine point seven one million
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  dollars. That's more than double the S4.69 million dollars from the prior 12-month period.
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  Huge improvement. And it was mainly driven by higher operating profit before
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  working capital changes and
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  And also lower payments for things like income tax. Yeah.
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  It really signals that the core business is now throwing off significant cash.
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  Yeah. That's a very healthy sign. Right.
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  Investing activities also brought in cash, but a bit less than before.
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  S, $1.76 million versus $2.28 million.
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  Yeah, slightly lower. The reason was lower proceeds from the disposal of plant
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  and equipment this time around.
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  And they actually spent more on capital expenditure buying plant right of use
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  assets, intangible assets. So less cash from selling old stuff,
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  more cash going into new stuff, reinvesting in the business.
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  Although interestingly, they pulled out the same as $2.5 million from fixed
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  deposits in both periods, strategic cash management there. And financing activities used more cash.
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  That's $7.29 million versus $5.82 million.
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  Correct. And that lines up with what we saw on the balance sheet.
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  It was largely due to higher lease liability repayments and increased finance
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  costs, paying down those bigger lease obligations.
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  That outflow was partly offset by the cash coming in from the warrants being exercised.
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  So after all that cash moving around, operations bringing more in,
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  investing taking a bit more out, financing taking more out, what was the net
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  effect on their cash balance? The net result was very positive.
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  Cash and cash equivalents increased by S4.18 million dollars over the 18 months.
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  They ended the period with a strong cash balance of 9.55 million dollars.
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  Yeah. Which is way up from 5.37 million dollars at the start.
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  So definitely enhanced liquidity, as they put it, much stronger cash position. Good stuff.
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  And just quickly, any key per share metrics to note, EPS, NAV?
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  Yeah, quickly. Basic earnings per share, including everything,
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  was 0.04 cents for the 18 months.
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  That's a nice turnaround from the loss of 0.02 cents they showed for the prior
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  six-month period comparison we discussed earlier.
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  Diluted EPS also improved. and the net asset value, NAV per share,
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  ticked up slightly to 0.88 cents from 0.87 cents at the end of 2023.
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  So, small improvements, but directionally consistent with the improved profit
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  and stronger balance sheet. Shareholders are seeing a bit of value accretion.
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  Okay, great overview of the numbers. Now let's shift gears. Looking ahead,
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  what's the outlook for Aniko and the logistics sector in Singapore?
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  Well, the outlook for Singapore logistics in 2026 is apparently going to be
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  driven by technology, sustainable practices, and resilient infrastructure.
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  Sort of the key themes you hear a lot about. But it's not all smooth sailing.
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  They explicitly mentioned challenges, labor shortages, increasing cost of business,
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  and instability in the world's geopolitical situation. And they say these would
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  continue to impact the performance.
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  So it was a dynamic environment, potential headwinds, definitely acknowledged.
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  Right. Those are some significant headwinds. Labor shortages,
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  costs, global instability.
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  How does Enico's strategy stack up against those? Are their plans robust enough
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  or maybe a bit optimistic given those challenges?
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  That's a fair question. Their strategy seems designed, at least partly,
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  to tackle these head-on.
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  They want to continue its momentum by focusing on contracts that are profitable
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  and that will provide positive cash flows.
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  Being selective should help buffer against rising costs. The focus on operational
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  efficiencies in Richland Logistics, their organic growth plan,
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  probably involves tech or process improvements, which could help mitigate labor
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  pressures internationally.
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  Doing more with what they have. And it's not just about hunkering down,
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  right? They talked about actively seeking new growth. Exactly.
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  It's a two-pronged strategy.
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  Organically, they want to grow Richland by improving efficiency,
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  deepening customer ties, offering more value.
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  Standard blocking and tackling, but important. But then there's the inorganic side.
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  They're actively looking to identify strategic opportunities for diversification.
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  Expand it to new markets, develop unique offerings, build a diversified portfolio
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  of profitable cash flow generative businesses.
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  So it's not just about getting bigger in logistics. It's about building a broader,
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  potentially more resilient company for the future.
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  And it's not just talk, is it? We saw some concrete examples recently.
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  Like in April 2025, Richland secured five new contracts worth about $4 million a year. That's right.
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  Five new deals, aggregate value around $4.05 million annually.
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  And they're decent terms. Two to three years plus extension options.
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  Solid wins. And one of those contracts really stood out, the 100% green distribution
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  model using five EV trucks in Singapore.
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  That feels significant. It absolutely is. It's more than just another contract.
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  It puts them right at the intersection of logistics and sustainability.
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  Using EV trucks for a green distribution model isn't just good PR.
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  It's a tangible commitment that could attract a whole new segment of customers,
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  maybe even investors, focused on ESG criteria. It differentiates them.
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  Okay. And then another move, maybe even bigger strategically,
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  that exclusive distribution deal signed in July 2025 for some kind of engineering
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  solution for the oil and gas sector.
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  Yes, this one's potentially huge. An innovative engineering solution in multi-phase transportation.
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  The claims are pretty bold. It can enhance the efficiency of oil and gas transportation.
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  Significantly increase production rates, and this is key.
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  Eliminate the routine flaring process reducing carbon emissions.
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  They're aiming for a pilot test in Indonesia later this year, 2H2025.
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  Wow, eliminating flaring and boost in production. That sounds like a game changer if it works.
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  This moves Enico beyond just logistics into high-value, tech-driven solutions
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  addressing major environmental pain points in the energy industry.
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  If this technology delivers, it could command premium value,
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  attract major partners, and really position them as innovators in sustainable
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  energy solutions, not just movers of goods. It's a serious diversification play
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  with major potential upside.
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  So let's try and wrap this up for you. Enico Energy Limited,
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  clearly they've managed a significant turnaround getting back into profitability.
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  And it seems driven by a pretty disciplined cost control alongside solid growth
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  in their main logistics business.
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  Looking forward, they're not sitting still. They've got a strategy mixing organic
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  growth and logistics with, well, quite ambitious inorganic diversification,
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  pushing into sustainability and innovative tech solutions.
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  And that brings us to a final thought for you, the listener, to mull over.
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  We see Enico making these explicit commitments to sustainable practices.
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  We see the EV trucks in their green distribution model.
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  We see this potentially groundbreaking engineering solution for reducing carbon
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  emissions in oil and gas.
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  So the question is, how might these initiatives go beyond just impacting their profit margins?
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  How could they fundamentally reshape Antico's position in the market?
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  Could this attract different kinds of customers, different investors,
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  maybe even change how we think about a logistics and energy solutions company
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  in this increasingly eco-conscious world.
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  Is this the blueprint for their future? Definitely something to think about.
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  A big thank you for joining us on this deep dive into Enneco Energy Limited.
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  We hope it's given you a clearer picture of where they've been and where they might be headed.
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  Keep digging, keep exploring, and we'll catch you on the next deep dive.