Company Spotlight: News Fueling Financial Insights

Avangaad Wins RM66.8M Contracts, Earnings Boost Expected

Avangaad Bhd secured two significant tugboat contracts totaling RM66.8 million from Northport Malaysia, extending existing charters and adding new vessels. The first contract extends three 40-tonne tugboats for two years (RM18.9 million), while the second provides three 50-tonne tugboats for five years (RM47.9 million) with a potential five-year extension. The company expects these deals to positively impact earnings and net tangible assets starting FY2025. Despite the news, Avangaad’s stock remained flat at 27.5 sen during midday trading, with a year-to-date decline of 8.3%. The contracts reinforce Avangaad’s position in marine transportation but highlight investor caution amid broader market challenges.

Sentiment Analysis

✅ Positive Factors

• Revenue Stability: RM66.8 million contracts provide multi-year cash flow visibility.
• Earnings Growth: Expected boost to FY2025 earnings and net tangible assets.
• Strategic Partnership: Northport’s repeat business signals trust in Avangaad’s services.

⚠️ Concerns/Risks

• Stock Performance: Flat reaction despite contract wins; YTD decline suggests broader skepticism.
• Execution Risk: Dependence on timely delivery and operational efficiency.

Rating: ⭐⭐⭐⭐

Short-Term Reaction

📈 Factors Supporting Upside

• Contract announcements may attract investor attention to undervalued stock.
• Potential re-rating if earnings guidance is upwardly revised.

📉 Potential Downside Risks

• Market may have priced in contracts already, limiting immediate upside.
• Sector-wide headwinds (e.g., fuel costs, port demand volatility) could dampen sentiment.

Long-Term Outlook

🚀 Bull Case Factors

• Recurring Revenue: Long-term contracts (up to 10 years with extensions) ensure steady income.
• Sector Recovery: Marine transport demand could rise with global trade rebound.

⚠️ Bear Case Factors

• Competition: Rival firms may undercut pricing in future tenders.
• Macro Risks: Economic slowdowns could reduce port activity and contract renewals.

Investor Insights

Recommendations:

• Value Investors: Consider accumulation on dips given long-term cash flow visibility.
• Traders: Monitor for short-term catalysts like volume spikes or sector news.
• Risk-Averse Investors: Await clearer earnings traction before entry.

Business at a Glance

Avangaad Berhad owns and operates marine vessels for the transportation and offshore storage of oil and gas in Malaysia. The company offers offshore storage of oil and gas product tankers that are built to transport refined petroleum products to end-users or other refineries for further processing; floating storage unit/ Offloading (FSU/FSO), a support services for production platforms, including the operation of offshore oil and gas storage facilities; and operates offshore supply vessels and fast crew boats that are designed to transport personnel or light cargo between offshore facilities. It also provides various port marine services, including towage services comprising towage or positioning support for vessels lacking in maneuverability; mooring services that secures a marine vessel to specially constructed fixture, such as handling mooring lines; dockside mooring services that secure vessels to floating structures and fixtures at the wharf; escort assistance; environmental monitoring; and support for ship-to-ship transfer services. In addition, the company is involved in shipbuilding and repair services, including hull construction, machinery installation, equipment integration, painting and thorough testing, as well as inspection, modification, and maintenance solutions. Further, it engages in the provision of engineering, procurement, construction, installation and commissioning of floating storage and offloading vessels, as well as marine consultancy and cargo broking services. The company was formerly known as E.A. Technique (M) Berhad and changed its name to Avangaad Berhad in February in 2025. The company was incorporated in 1993 and is headquartered in Kuala Lumpur, Malaysia. Avangaad Berhad is a subsidiary of Voultier Sdn Bhd.
Website: http://www.eatechnique.com.my

Unveiling Analysis: Opportunities and Risks Uncovered

Financial Performance Analysis

• Revenue Growth & Trends:

  • Revenue declined by 7.83% YoY in 2024 (MYR 122.66M vs. MYR 133.08M in 2023).
  • QoQ volatility: Revenue dropped sharply in Q1 2024 (MYR 31.31M) but rebounded in Q2 2024 (MYR 34.56M).
  • Key Insight: The decline suggests operational challenges or reduced demand in the oil/gas transportation sector.

• Profitability:

  • Gross Margin: Not explicitly reported, but net income surged 551.4% YoY (MYR 154.33M in 2024 vs. MYR 23.67M in 2023), likely due to cost-cutting or one-time gains.
  • Operating Margin: Improved significantly, reflecting better cost control.
  • Net Margin: 125.8% (unusually high, possibly due to non-recurring items).

• Cash Flow Quality:

  • Free Cash Flow (FCF): Negative in recent quarters (e.g., Q4 2023 FCF: -MYR 8.9M), indicating liquidity strain.
  • P/OCF Ratio: 3.58 in Q1 2024, suggesting undervaluation relative to operating cash flow.

• Key Financial Ratios:

  Ratio	Value (Current)	Industry Avg.	Implication
  P/E	2.08	10.5	Undervalued vs. peers.
  P/B	1.23	1.8	Slightly below industry.
  ROE	84.2%	15%	Exceptional but likely unsustainable.
  Debt/Equity	0.30	0.5	Low leverage, lower risk.
  Quick Ratio	1.65	1.2	Strong short-term liquidity.

  Context: High ROE may stem from low equity base (MYR 152.09M net income vs. MYR 180.6M equity).

Market Position

• Market Share & Rank:
  • Niche player in Malaysia’s marine oil/gas transport sector. Estimated market share: ~5-7% (based on revenue vs. industry leaders like MISC Berhad).
• Revenue Streams:
  • Primary: Offshore storage (FSU/FSO) and vessel operations.
  • Secondary: Fast crew boats (minimal growth; +2% YoY).
• Industry Trends:
  • Global oil demand recovery post-pandemic supports sector growth.
  • Risk: Volatile oil prices may impact charter rates.
• Competitive Advantages:
  • Asset specialization: Focus on FSU/FSO vessels (higher margins).
  • Low debt: Debt/Equity of 0.3 vs. industry avg. of 0.5.

Risk Assessment

• Macro Risks:
  • Oil price volatility: Brent crude swings directly impact charter revenues.
  • FX risk: MYR-USD fluctuations (revenues often USD-denominated).
• Operational Risks:
  • High capex: Vessel maintenance costs could strain cash flow.
  • Quick Ratio: Improved to 1.65 (Q1 2025) but was 0.22 in Q1 2024, showing past liquidity stress.
• Regulatory Risks:
  • IMO 2020 compliance: Stricter emissions rules may increase costs.
• Mitigation Strategies:
  • Hedging: Fuel price hedging to manage oil volatility.

Competitive Landscape

• Key Competitors:

  Company	P/E	ROE	Debt/Equity	Market Cap (MYR)
  Avangaad Berhad	2.08	84%	0.30	364M
  MISC Berhad	15.2	8%	0.45	12.5B
  Bumi Armada	6.5	12%	0.60	3.2B

• Strengths:
  • Higher ROE vs. peers (efficiency advantage).
• Weaknesses:
  • Smaller scale: Limited bargaining power vs. global players.
• Disruptive Threats:
  • Renewable energy shift: Long-term risk to fossil fuel demand.

Valuation Assessment

• Intrinsic Valuation (DCF):
  • Assumptions: WACC 10%, Terminal growth 3%.
  • NAV: MYR 0.35/share (27% upside).
• Valuation Ratios:
  • P/E of 2.08 vs. industry 10.5 suggests deep undervaluation.
  • EV/EBITDA 1.71 (vs. industry 6.0) reinforces cheapness.
• Investment Outlook:
  • Catalysts: Oil demand recovery, potential contract wins.
  • Risks: Earnings volatility, capex spikes.
• Target Price: MYR 0.35 (12-month, +27%).
• Recommendations:
  • Buy: For value investors (low P/E, high ROE).
  • Hold: For risk-averse investors (liquidity concerns).
  • Sell: If oil prices crash below USD 60/barrel.
• Rating: ⭐⭐⭐⭐ (4/5 – High upside but operational risks).

Summary: Avangaad Berhad is undervalued with strong profitability but faces revenue volatility and sector risks. A speculative buy for investors comfortable with oil/gas exposure.

Market Snapshots: Trends, Signals, and Risks Revealed