Tee International back in the black on gains from de-recognition of wound-up unit

EMBATTLED mechanical and electrical services group Tee International : M1Z 0%has reported a return to profitability despite a plunge in turnover.

Second-quarter net profit was S$34.3 million in the 3 months to Mar 31, 2022, reversing a loss of S$6.1 million in the year-ago period, according to unaudited results last Saturday (May 14).

Revenue more than halved to S$17.6 million, from S$35.6 million in the year before – mainly on plummeting sales in the engineering and construction segment.

Meanwhile, other operating expenses ballooned to S$38.0 million, from S$1.8 million previously.

Still, the bottom line was shored up by S$71.9 million in gains on the de-recognition of Trans Equatorial Engineering and its subsidiaries upon loss of control. Its wholly-owned Trans Equatorial unit was officially placed under creditors’ voluntary liquidation in January 2022.

Tee International posted a half-year net profit of S$33.6 million, against a loss of S$6.9 million previously, even as revenue fell by 50.9 per cent to S$44.1 million, from S$89.7 million before.

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Earnings per share (EPS) came to 5.30 Singapore cents for the 3 months, turning around from a loss of 0.95 Singapore cent previously. EPS was 5.20 Singapore cents for the half-year, against a loss of 1.07 Singapore cents before.

The group’s net asset value stood at a negative 22.7 Singapore cents a share as at Mar 31, 2022, compared with a negative 27.8 Singapore cents a share as at Sep 30, 2021.

Tee International’s outstanding engineering and construction order book was about S$44.7 million, with 5 ongoing projects as at end-March 2022, although the outlook statement cited headwinds such as a manpower shortage, supply-chain disruption, and rising input costs.

The board also noted that Tee International and its subsidiaries plan to propose a scheme of arrangement between the company and its creditors, and has separately entered into a non-binding term sheet with 2 investors for a possible restructuring process.

Despite challenges, the group will press on to form “strategic partnership with valued and synergetic partners to secure new projects and be vigilant on cash flow and cost management”, it said. The group will also work on divesting overseas infrastructure assets.

No dividend was recommended. The board cited “an accumulated loss-making position” and the need to manage cash flow in a “highly volatile and uncertain global operating environment”.

Trading in Tee International’s shares has been suspended since June 2021.