The Return Trends At HSS Engineers Berhad (KLSE:HSSEB) Look Promising

In recent years, HSS Engineers Berhad (KLSE:HSSEB), a Malaysian engineering and project management company, has been experiencing a steady rise in profitability. The company has been able to achieve this through its concerted effort in expanding its client base, geographical reach, and service offerings. In this article, we will examine the return trends at HSS Engineers Berhad and why they look promising.

1. Strong Revenue Growth

For the past five years, HSS Engineers Berhad has been able to achieve a strong revenue growth rate. The company’s revenue increased from MYR 255.9 million in 2016 to MYR 368.8 million in 2020, representing a compound annual growth rate (CAGR) of 9.56%. The company’s revenue growth was driven by its strong order book and ability to secure new projects in Malaysia and overseas.

The company also delivered strong financial results for the first quarter of 2021, with revenue of MYR 99.4 million, an increase of 24.3% compared to the same period in 2020. The revenue growth was attributed to the recognition of revenue from ongoing projects, as well as new projects secured during the period.

2. Increasing Profit Margins

HSS Engineers Berhad has also been able to increase its profit margins in recent years. The company’s gross profit margin increased from 36.03% in 2016 to 39.7% in 2020, while its net profit margin increased from 10.02% to 13.62% over the same period. The increase in profit margins was due to the company’s ability to optimize its operating expenses and improve operational efficiency.

3. Strong Order Book

HSS Engineers Berhad has a strong order book, which provides visibility of future revenue streams. As of 31 March 2021, the company’s order book stood at MYR 515.3 million. The order book includes projects in Malaysia, India, and Sri Lanka across various sectors including transportation, water, energy, and buildings.

4. Diversified Client Base

HSS Engineers Berhad has a well-diversified client base, which reduces its reliance on a single client or sector. The company’s clients include government agencies, statutory bodies, private corporations, and multinational companies. This diversification strategy has helped the company to mitigate risks and capture opportunities across different sectors.

5. Expansion into New Geographies and Services

In recent years, HSS Engineers Berhad has expanded its business into new geographies and services. The company has established a presence in India and Sri Lanka, where it has secured several infrastructure and engineering projects. The company has also expanded its service offerings to include project management, consultancy, and construction supervision services, which have helped to increase its revenue streams.

6. Positive Industry Outlook

The engineering and infrastructure industry in Malaysia is expected to grow in the coming years, driven by the government’s commitment to developing the country’s infrastructure. The government has allocated significant funds for infrastructure development projects, including the East Coast Rail Link, Pan Borneo Highway, and Kuala Lumpur-Singapore High-Speed Rail. These projects are expected to provide significant opportunities to companies such as HSS Engineers Berhad.

Conclusion

In conclusion, HSS Engineers Berhad has demonstrated strong financial performance in recent years, with increasing revenue and profit margins, a strong order book, a diversified client base, and expansion into new geographies and services. The company is well-positioned to benefit from the positive industry outlook in Malaysia and is expected to continue its growth trajectory in the coming years.