Navigating the currents of the Malaysian steel industry, CHOO BEE METAL INDUSTRIES BERHAD has just released its interim report for the first financial quarter ended 31 March 2025. This report offers a glimpse into the company’s performance, revealing a mixed bag of increased revenue alongside a shift to a pre-tax loss, reflecting the dynamic and challenging market conditions.
For retail investors in Malaysia, understanding these reports is crucial. While the top-line revenue saw a modest increase, the bottom line tells a story of squeezed margins and heightened operational costs. Let’s dive into the details to uncover the key takeaways from CHOO BEE METAL INDUSTRIES BERHAD’s latest financial disclosure.
Core Financial Highlights: A Closer Look
The first quarter of 2025 saw CHOO BEE METAL INDUSTRIES BERHAD record a revenue of RM90.6 million. This represents a 2% increase compared to the RM88.6 million achieved in the same quarter last year. However, despite this revenue growth, the company experienced a significant shift in its profitability, moving from a profit to a loss before taxation.
Revenue Performance
Q1 2025 Revenue
Q1 2024 Revenue
This modest 2.2% increase in revenue was primarily driven by a stronger contribution from the manufacturing segment, which saw higher sales volume.
Profitability Shift
Q1 2025 Profit Before Tax
Q1 2024 Profit Before Tax
The company recorded a loss before taxation of RM4.5 million in Q1 2025, a stark contrast to the profit of RM2.5 million in the corresponding quarter last year. This significant decline in profitability is attributed to “lackluster average selling prices” which dented margins, alongside increased factory and production costs and higher factory depreciation.
Earnings Per Share (EPS)
Q1 2025 Basic EPS
Q1 2024 Basic EPS
Reflecting the overall profitability, the basic loss per ordinary share for Q1 2025 stood at 2.27 sen, compared to earnings of 0.95 sen per share in Q1 2024.
Segment Performance Insights
CHOO BEE METAL INDUSTRIES BERHAD operates primarily through two segments: Manufacturing and Trading. Their individual performances paint a clearer picture of the overall results:
| Segment | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Change (%) | Profit/(Loss) Before Tax Q1 2025 (RM’000) | Profit/(Loss) Before Tax Q1 2024 (RM’000) |
|---|---|---|---|---|---|
| Manufacturing | 39,571 | 28,500 | +39% | (3,512) | 758 |
| Trading | 51,004 | 60,122 | -15% | (945) | 1,757 |
The Manufacturing segment was a standout in terms of revenue growth, increasing by a robust 39% to RM39.6 million. This was fueled by higher sales volume and stronger market demand. However, despite the revenue surge, this segment also registered a loss before taxation, indicating significant cost pressures.
Conversely, the Trading segment saw its revenue decline by 15% to RM51.0 million, primarily due to weaker average selling prices. This segment also contributed to the overall group’s loss.
Financial Health: Balance Sheet and Cash Flow
As of 31 March 2025, the company’s financial position shows some notable shifts. Total assets decreased slightly to RM606.1 million from RM630.1 million at the end of 2024, and total equity also saw a minor dip to RM589.5 million from RM594.0 million.
A positive highlight from the report is the significant improvement in cash flow from operating activities. The Group generated RM25.3 million in net cash from operations in Q1 2025, a substantial turnaround from the net cash used of RM22.0 million in the same period last year. This improvement was largely driven by effective management of inventories, which saw a positive change of RM44.9 million in working capital. Additionally, cash and bank balances increased to RM53.0 million from RM28.0 million at the end of 2024.
The company also maintains a healthy balance sheet with a net cash position as of 31 March 2025, improving from a gearing ratio of 1.7% in the prior year’s corresponding period. This indicates a strong liquidity position, which is vital in a volatile market.
Risks and Prospects: Navigating a Complex Landscape
The global steel industry is entering 2025 with a cautiously optimistic outlook, according to the report. While demand is gradually picking up, especially in countries like India, the sector continues to grapple with challenges such as China’s economic slowdown, global overcapacity, and ongoing trade tensions. Global capacity utilization is projected to remain moderate at around 75%.
In Malaysia, the steel sector benefits from steady demand, underpinned by significant infrastructure projects like the Penang Light Rail Transit, East Coast Rail Link (ECRL), and Pan Borneo Highway, alongside growth in semiconductor manufacturing and data center development. However, a key challenge arises from a substantial portion of these projects sourcing steel directly from China due to more competitive pricing. This intensifies pressure on domestic manufacturers like CHOO BEE METAL INDUSTRIES BERHAD.
Despite these structural challenges, including persistent supply imbalances and reliance on imports, the company maintains a constructive outlook on domestic demand. Policy interventions, such as moratoriums on new capacity additions and anti-dumping duties, are expected to provide some stability to the industry.
To navigate this competitive environment, CHOO BEE METAL INDUSTRIES BERHAD is focusing on several strategic goals for 2025: broadening its product offerings, enhancing cost competitiveness through prudent sourcing and inventory management, improving operational efficiency, and expanding its distribution networks. These initiatives are designed to ensure the Group remains agile and resilient, positioning itself to capitalize on emerging opportunities.
Summary and
This quarter’s results for CHOO BEE METAL INDUSTRIES BERHAD present a nuanced picture. While the company saw a modest increase in revenue, driven by its manufacturing segment, profitability was significantly impacted by challenging market conditions, particularly weaker average selling prices and rising costs. The robust improvement in cash flow from operations, largely due to effective inventory management, stands out as a positive financial development, bolstering the company’s liquidity.
Looking ahead, the Malaysian steel sector faces both opportunities from ongoing infrastructure projects and challenges from intense competition, especially from imports. The Group’s strategic focus on broadening product offerings and enhancing cost competitiveness will be crucial in navigating this landscape.
Key considerations for the future include:
- The ongoing impact of global overcapacity and trade tensions on steel prices and profitability.
- Increased competition from Chinese steel imports on major domestic infrastructure projects.
- The Group’s ability to effectively manage inventory and operational costs amidst fluctuating market demand and selling prices.
- The effectiveness of policy interventions in supporting the domestic steel industry.
What are your thoughts on CHOO BEE METAL INDUSTRIES BERHAD’s Q1 2025 performance? Do you think the company’s strategic initiatives will be enough to counter the market headwinds and return to profitability in the coming quarters? Share your views in the comments section below!
