Frencken must ‘keep on the lookout’ for mergers and acquisitions: report

Frencken posted a net cash position of $72.8m as of March 2022.

Amidst a recessionary environment, analysts from CGS-CIMB suggested that machine industry firm, Frencken Group Limited, should keep on the lookout for complementary mergers and acquisitions.

Although the government said it sees no recession in 2023, CGS-CIMB still cited it as a possibility in its report. 

Some recent acquisitions of Frencken were the Singapore-incorporated Avimac Limited for $14m and Malaysia-incorporated Penchem Technologies.

Frencken also posted a net cash position of $72.8m as of the end of March 2022, CGS-CIMB also noted.

It had a gross profit margin of 15.4% in the first quarter (Q1) of 2022, compared to 17.2% in the same period last year.

CGS-CIMB said this data showed that margin pressure in Q1 2022 may remain in the second quarter (Q2) of 2022, but might improve in the second half (H2) of 2022 through cutting operating expenses and reflecting the current cost environment for new orders.

For Frencken’s automotive sector, CGS-CIMB said the backlog from supply chain disruptions in the first half of 2022 may help in H2 2022 performance as production returns to its momentum.

Recent data from Frencken showed that its profit after taxation and minority interests (PATMI) went up 38% year-on-year to $58.7m in the financial year (FY) of 2021.

Without the $6.2m loss in FY 2020, Frencken’s PATMI for FY 2021 would have risen by 20.4%.