Precision Cleaning Specialist JE Cleantech Delivers Healthy Performance In 2023

Rhea-AI Summary

JE Cleantech Holdings , a NASDAQ-listed precision cleaning specialist, reported a profitable performance in 2023 with revenue of S$18.0 million and net income of S$0.5 million. The company secured new orders worth over S$4.7 million for precision cleaning systems in Singapore, developed autonomous cleaning robots, and invested in reducing its carbon footprint. The positive performance was attributed to higher margin in dishware washing, although demand for cleaning equipment softened. The CEO expressed optimism for future industry sentiments and highlighted plans for product diversification and revenue stream expansion.

Positive

• Reported a profitable performance in 2023 with revenue of S$18.0 million and net income of S$0.5 million.

• Secured new orders worth over S$4.7 million for precision cleaning systems in Singapore.

• Developed autonomous cleaning robots for food and beverage establishments and industrial buildings.

• Invested in reducing its carbon footprint through electrification of the vehicle fleet and installation of solar panels.

• Leveraged longstanding customer relationships to build traction for products and services, while diversifying revenue streams through adjacent product offerings.

Negative

• Softened demand for cleaning equipment and higher operating costs compared to the previous financial year.

• An extension in delivery schedule of precision cleaning systems to a key customer in Malaysia to 2024 and 2026.

• Lower activity in the sale of other cleaning systems and equipment due to completion of installation.

• Reduction in revenue from the centralized dishware washing and cleaning services segment compared to the previous financial year.

• Decrease in gross profit and gross margin due to higher raw material, manpower, and utilities costs.

Financial Analyst

JE Cleantech's annual report indicates a dip in net income from S$1.2 million to S$0.5 million, despite maintaining a relatively stable revenue base year-on-year. The decrease in net profitability can be attributed to higher operating costs, suggestive of pricing pressures or increased investment in technology and sustainability as indicated by their move to electrify their vehicle fleet and install solar panels. The shift towards higher margin contracts within the dishware washing segment signals a strategic pivot that could enhance profitability in the long run. However, investors should monitor the extension in delivery schedules to a key customer, as it may suggest liquidity or production challenges that could impact future revenue recognition.

Cleantech Market Analyst

The strategic investments JE Cleantech is making in automation, robotics and IoT integration, while currently weighing on the bottom line, position the company at the forefront of innovation within the industry. Their foray into autonomous cleaning robots and IoT-enhanced cleaning equipment could revolutionize operational efficiency for their clients. Nevertheless, the success of these initiatives will hinge on market reception and the ability to achieve scale. The balance between capital expenditure on technology and its impact on service offerings will be critical for future growth. Investors should consider the potential market size for such technologies in the cleantech space and the competitive landscape JE Cleantech is operating within.

Environmental, Social and Governance (ESG) Analyst

JE Cleantech's focus on reducing its carbon footprint aligns with a growing trend of ESG considerations in investment decisions. The electrification of their vehicle fleet and installation of solar panels represent not only a commitment to sustainability but also a potential reduction in long-term operational costs through energy savings. This proactive approach towards ESG could improve the company's appeal to socially conscious investors and potentially result in cost savings that may enhance future margins. It will be important to track these initiatives' impact on the company's operating costs and any subsequent benefits to their profit margins.

• Secured new orders worth over S$4.7 million for precision cleaning systems in Singapore
• Developing autonomous cleaning robots for food and beverage establishments and industrial buildings
• Invested in carbon footprint reduction with electrification of vehicle fleet and installation of solar panels
  

SINGAPORE, May 01, 2024 (GLOBE NEWSWIRE) -- Singapore-headquartered, NASDAQ-listed precision cleaning and cleantech equipment manufacturer JE Cleantech Holdings Ltd (NASDAQ: JCSE) (“JE Cleantech” or, together with its subsidiaries, the “Group”) has delivered a profitable performance in its annual report for the financial year ended December 31, 2023 (“2023 financial year”), with revenue of S$18.0 million and net income of S$0.5 million.

The performance was recorded amid higher margin in its centralized dishware washing business segment, alongside softer demand for its cleaning equipment and higher operating costs, compared to the preceding financial year ended December 31, 2022 (“2022 financial year”) when the Group booked revenue of S$18.6 million and net income of S$1.2 million.

Commenting on JE Cleantech’s performance, Founder and CEO Ms. Hong Bee Yin said, “We are pleased to turn in a positive performance in 2023, despite some headwinds in the form of a slowdown in the electronics and hard disk drive industries. Nevertheless, we expect industry sentiments to improve towards the second half of 2024 as demand for hard disk drives remains intact amid the artificial intelligence boom. Rising activity in the tourism and hospitality industries in Singapore also bode well for us. We continue to leverage the longstanding relationships we have with our customers to build traction for our products and services, while developing adjacent product offerings to diversify our revenue streams.”

The Group’s sale of cleaning systems and other equipment business segment generated S$11.0 million in revenue in the 2023 financial year, compared to S$11.4 million in 2022 financial year. The Group secured recurring orders worth over S$4.7 million for precision cleaning systems from its existing customers in Singapore in 2023. This was, however, weighed down by an extension in the delivery schedule of precision cleaning systems to a key hard disk drive customer in Malaysia to 2024 and 2026, as well as lower activity in the sale of other cleaning systems and other equipment due to completion of installation.

The Group’s centralized dishware washing and cleaning services segment recorded revenue of S$7.0 million, compared to S$7.2 million in the preceding financial year. While business activity was lower year-on-year, the Group successfully renewed contracts with certain clients at higher prices.

The Group yielded gross profit and gross margin of S$4.4 million and 24.2%, taking into account higher contract prices in the dishware washing and cleaning services, offset by higher raw material, manpower and utilities cost. This compares with S$5.1 million and 27.3% in the 2022 financial year.

During the 2023 financial year, the Group has invested in and integrated new technologies, including automation and robotics, into its operations to improve its ability to customize at scale, cost efficiency and consistency. It has also implemented Internet of Things (IoT) sensors at its manufacturing facility, which allow the Group to keep track of production activity and overheads, and help enhance efficiency and productivity.

Additionally, the Group has invested in reducing its carbon footprint in 2023. It has begun electrifying its fleet of vehicles since early 2023 and completed the installation of solar panels at its manufacturing facility and office in January 2023, which are expected to generate about 232 megawatt-hours of energy per year, or about half of the energy consumed at the site. Apart from reducing its carbon footprint, electricity generated from solar energy also provides cost savings and energy security for the Group.

In the year ahead, JE Cleantech will look to build on its expertise to enhance its value-add to customers. The Group is currently developing autonomous cleaning robots for industrial use in food and beverage establishments and industrial buildings in Singapore. It expects to be able to deploy these robots in the second half of 2024, to supplement the on-site cleaning services provided to its customers. The Group is also developing IoT sensors that can be attached to various cleaning equipment in order to enhance the equipment’s efficiency, productivity and overall performance, for its customers in Singapore, Malaysia and Thailand. At the same time, it will continue to identify viable opportunities to expand its presence in its existing markets in Singapore and Malaysia, as well as in new markets.

About JE Cleantech Holdings Limited

JE Cleantech Holdings Limited is based in Singapore and is principally engaged in (i) the sale of precision cleaning systems and other equipment; and (ii) the provision of centralized dishwashing and ancillary services. Through its subsidiary, JCS-Echigo Pte Ltd, the company designs, develops, manufactures, and sells cleaning systems for various industrial end-use applications primarily to customers in Singapore and Malaysia. Its cleaning systems are mainly designed for precision cleaning, with features such as particle filtration, ultrasonic or megasonic rinses with a wide range of frequencies, high pressure drying technology, high flow rate spray, and deionized water rinses, which are designed for effective removal of contaminants and to minimize particle generation and entrapment. The Company also provides centralized dishwashing services through its subsidiary, Hygieia Warewashing Pte Ltd, since 2013 and general cleaning services since 2015, both mainly for food and beverage establishments in Singapore. The Company is listed on NASDAQ since 2022. For more information about JE Cleantech, please visit: www.jecleantech.sg.

Disclaimer: Forward looking statements

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements may be identified by such words or phrases as "should," "intends," "is subject to," "expects," "will," "continue," "anticipate," "estimated," "projected," "may," "I or we believe," "future prospects," "our strategy," or similar expressions. Forward-looking statements made in this press release that relate to our future contract revenues among other things involve known and unknown risks and uncertainties that may cause the actual results to differ materially from those expected and stated in this announcement. We undertake no obligation to update "forward-looking" statements.

For media enquiries, please contact:	Karin Lai
	SEC Newgate Singapore
	karin.lai@secnewgate.sg
	Jason Long
	enquiry@jecleantech.sg
	Phone number: +65 63684198
	Other number: +65 66029468

FAQ

What is the revenue and net income of JE Cleantech in 2023?

JE Cleantech reported revenue of S$18.0 million and net income of S$0.5 million in 2023.

What new technologies did JE Cleantech integrate in its operations in 2023?

JE Cleantech integrated automation and robotics into its operations, implemented IoT sensors, and invested in reducing its carbon footprint.

What are JE Cleantech's plans for future product development?

JE Cleantech is developing autonomous cleaning robots and IoT sensors for enhancing efficiency and productivity in cleaning equipment, as well as expanding its presence in existing and new markets.