KUALA LUMPUR (Aug 21): Kelington Group Bhd (KL:KGB), which provides ultra-high purity gas and chemical delivery systems that are critical to semiconductor manufacturing, sees strong opportunities ahead for the group, following a 23.3% year-on-year jump in its second-quarter net profit.

The group made a net profit of RM32.89 million for the second quarter ended June 30, 2025 (2QFY2025) from RM26.67 million in 2QFY2024, even as revenue dropped 12.2% to RM282.02 million from RM321.21 million. The improved earnings was driven by a more profitable mix of projects, the group said in a bourse filing on Thursday.

"Given the strong pipeline of opportunities, the group was able to be more selective in pursuing higher-margin projects," it said.

The group also declared a second interim dividend of 2.5 sen per share, up from two sen a year ago, to be paid on Oct 10. This brings its year-to-date dividends to five sen, up from four sen in the corresponding period last year.

During the year, Kelington secured RM549 million in new contracts, not including a potential European project for which the company received a letter of intent valued between €30 million and €50 million (about RM146 million to RM244 million). The project would mark a strategic expansion for the group into Europe.

Including carried-forward projects, the group said its order book totalled RM1.82 billion, with RM1.33 billion still outstanding.

The decline in quarterly revenue was attributed to weaker contributions from Malaysia (-12%) and China (-43%), primarily due to timing differences in engineering project recognition and lower industrial gas sales. This was partially offset by a 21% increase in revenue from Singapore, led by advanced engineering projects.

For the first half of 2025, the group's net profit rose 15.6% to RM59.53 million, while revenue fell 16.4% to RM552.3 million.

Kelington remains confident about its prospects, with rising global fab equipment spending and the implementation of Malaysia’s National Semiconductor Strategy (NSS), which has already attracted over RM63 billion in related investments.

Demand for industrial gases, particularly liquid carbon dioxide, remains stable, it noted, with overseas sales gaining momentum despite muted growth in the food and beverage end-market.

The recent commissioning of an on-site gas generator for an optoelectronics client has expanded Kelington’s product offerings to include nitrogen, hydrogen, and oxygen.

The group is also exploring green hydrogen production in collaboration with various state authorities and is actively positioning itself in the emerging carbon capture, utilisation, and storage (CCUS) sector, working with industry and academic partners to build its technical capabilities.

On Thursday, Kelington's shares closed down three sen or 0.6% at RM4.63, giving the group a market capitalisation of RM3.51 billion. Year to date, the stock has gained 29.7%.