The evolving market dynamics in Southeast Asia have reshaped the competitive landscape of the ductwork business within the semiconductor industry, significantly affecting the operating environment with respect to our ductwork segment. The entry of overseas contractors into the semiconductor construction sector has introduced new competitive dynamics, as these contractors typically procure supplies and subcontracting services through their own established supply chains and networks, many of which are based overseas. As a result, participation in some projects was limited, despite certain tender bids being competitive last year, which adversely affected our Group’s ductwork business in Financial Year 2025 (“FY2025”). In addition, geopolitical uncertainties with significant global implications have further increased market fluidity and unpredictability. At the same time, several ductwork manufacturers established new production facilities in Southeast Asia in response to geopolitical developments, which has further increased competition in the region.

The intensified and rapid shift in the market landscape, coupled with changes in procurement behaviour, has required a different strategic approach and competitive initiatives. In response, and with a clear understanding of the evolving market dynamics, we implemented alternative competitive strategies aimed at strengthening our position and improving our chances of securing projects. These efforts contributed to new order wins and improved order intake, with business activity picking up in the second half of the year, resulting in increased revenue and a narrowing of losses.

Financial Performance

Against the backdrop of intensely competitive market conditions, the Group recorded a loss in FY2025. As noted earlier, the greenfield project for the year was awarded to overseas contractors. With limited project-based order intake, the Group’s revenue for FY2025 stood at $6.20 million, representing a 20.8% decline from $7.83 million in FY2024. Compared to the same periods in the prior year, revenue in the first half of FY2025 fell by 57.6%, while the second half saw an increase of 44.2% (relative to the corresponding period).

The Group recorded an operational loss after tax of $2.56 million in FY2025, compared to a profit of $0.51 million in FY2024. The unfavourable results were primarily due to lower revenue and costs associated with scaling up production capacity as part of project-readiness for the greenfield project. Additionally, intensified competition led to compressed gross margins. Administrative expenses rose by 20.6% (or $0.55 million), mainly driven by higher salary costs, including additional headcount in preparation for the greenfield project. Operating expenses increased by 41.4%, largely due to foreign currency exchange differences of $0.28 million and higher depreciation expenses of $0.10 million.

As of 31 December 2025, the Group maintained a healthy cash and cash equivalents balance of $16.36 million, despite net cash outflows of $2.05 million arising from operating, investing, and financing activities of $1.19 million, $0.44 million, and $0.42 million, respectively. The majority of the cash, totalling $14.53 million, is held in fixed deposits, which generated interest income of $0.29 million. The decline in interest income, by $0.29 million, was primarily due to lower fixed deposit placements and reduced interest rates. The Group will continue to exercise a prudent approach to cash and credit management.

Market And Competitive Landscape And Adaptation

The ductwork industry in Southeast Asia is expected to become increasingly dynamic and competitive amid the unprecedented shifts in the market landscape. The semiconductor construction sector is becoming increasingly volatile and unpredictable as overseas players have entered and crowded the semiconductor construction ecosystem, spanning from main contractors to downstream supply chains, including ductwork providers. The influx of participants across various tiers of the supply chain has led to intensified competition. In addition, certain main contractors require suppliers outside their established supply chains to undergo vendor prequalification, and their ductwork systems typically involve distinct specifications and configuration requirements. Nevertheless, our strong portfolio of project references helps to facilitate vendor prequalification. At the same time, new entrants among ductwork manufacturers are offering lower-cost products with varying quality standards. Our longstanding competitive strengths in product quality, delivery lead time, and after-sales service, have helped to sustain the continued patronage of our regular customers. Operationally, we have invested in upgrading selected machinery to improve the efficiency and quality of our duct fabrication processes. We also pursued several collaborative initiatives to diversify our upstream supply chain.

Looking ahead, the challenges in the competitive landscape are expected to continue intensifying. Geopolitical trade tensions, which have implications for the semiconductor industry, represent another risk factor that is likely to persist. The global economic impact of the ongoing conflict in the Middle East remains uncertain. Nonetheless, the semiconductor industry’s growth trajectory remains positive, particularly with Artificial Intelligence (“AI”) emerging as a key technological driver. Over the longer term, Singapore and Malaysia are expected to remain key destinations for major chipmakers as they diversify geopolitical risks and enhance supply chain resilience. With the strong business fundamentals and resilience that we have built over the years, together with strategic initiatives implemented to address competitive pressures, we believe we are well-positioned to navigate these challenging times and mitigate potential adverse impacts. We will remain adaptable to changing market conditions while maintaining focus on the disciplined execution of our strategy. In addition, we will work towards a leaner organisational structure, promote greater agility in our operations, and continue to actively manage costs to enhance our financial performance.