TEO SENG CAPITAL BERHAD Q1 2025 Latest Quarterly Report Analysis

Greetings, fellow investors and market enthusiasts! Today, we’re diving into the latest financial report from **TEO SENG CAPITAL BERHAD**, a prominent player in Malaysia’s poultry industry. Their unaudited condensed consolidated results for the first quarter ended 31 March 2025 have just been released, and they offer a fascinating glimpse into the company’s performance amidst evolving market conditions.

While the report indicates a slight dip in overall revenue, the company has managed to turn a corner in profitability, showcasing resilience and strategic adjustments. What truly stands out is the significant improvement in net profit and a commendable increase in earnings per share, alongside a fresh dividend declaration for shareholders. This suggests that despite facing market challenges, TEO SENG CAPITAL is navigating the landscape effectively. Let’s unpack the details!

Q1 2025 Financial Performance: A Closer Look

TEO SENG CAPITAL BERHAD’s first quarter of 2025 presented a mixed bag of results. While revenue saw a decline, the Group managed to significantly boost its net profit, indicating strong cost management and other income contributions. Here’s a snapshot of the key figures:

Comparing the current quarter to the same period last year:

• Revenue decreased by 11.3% from RM190.1 million to RM168.6 million. This was primarily driven by the Poultry Farming segment.
• Profit Before Taxation (PBT) also saw a decline of 11.9%, falling from RM41.0 million to RM36.1 million.
• However, the most striking improvement was in Profit for the Period Attributable to Equity Holders, which surged by 20.9%, from RM34.0 million to RM41.1 million. This significant jump was largely due to a favorable tax expense reversal in the current quarter compared to a tax expense in the prior year.
• Consequently, Basic Earnings Per Share (EPS) also improved by 19.8%, reaching 6.95 sen from 5.80 sen in Q1 2024.

Segmental Performance: A Tale of Two Divisions

TEO SENG CAPITAL’s operations are broadly divided into Poultry Farming and Investment & Trading of poultry-related products. Their individual performances shed light on the overall results:

• The Poultry Farming segment experienced a 13.8% decrease in revenue to RM142.3 million. This was primarily attributed to a decline in the average selling price of eggs, despite a higher sales quantity. As a result, its pre-tax profit fell by 15.1% to RM32.2 million.
• In contrast, the Investment & Trading of poultry-related products segment showed positive momentum, with revenue increasing by 5.0% to RM26.3 million. This translated into a robust 27.1% rise in pre-tax profit to RM3.9 million, driven by higher demand for animal health products.

Financial Health: Balance Sheet and Cash Flow

The Group’s financial position as at 31 March 2025 remains solid:

• Total Assets grew to RM869.1 million from RM846.1 million at the end of 2024.
• Total Equity also increased to RM646.7 million (from RM618.4 million), reflecting the period’s profitability.
• Net Asset per Share improved to RM1.09 (from RM1.04).
• Total Borrowings saw a slight decrease of approximately 1.0% to RM109.7 million, mainly due to repayment of CAPEX financing.

From a cash flow perspective, the Group demonstrated strong operational cash generation:

• Net Cash Flow generated from Operating Activities significantly increased by 88.7% to RM28.1 million in Q1 2025, compared to RM14.9 million in the corresponding period last year. This is a very positive sign, indicating efficient management of working capital.
• Overall, Net Changes in Cash and Cash Equivalents turned positive, with an increase of RM6.6 million, a stark contrast to the RM5.0 million decrease in Q1 2024. The cash and cash equivalents stood at RM133.5 million at the end of the quarter.

Risks and Prospects: Navigating the Future

The poultry industry, like many agricultural sectors, is susceptible to price fluctuations and input costs. TEO SENG CAPITAL BERHAD’s Q1 2025 performance highlighted the impact of declining average selling prices for eggs on their core Poultry Farming segment. This remains a key factor to monitor.

However, the company’s diversification into Investment & Trading of poultry-related products, particularly animal health products, appears to be a strategic move, contributing positively to overall profitability and offsetting some of the challenges faced by the farming division.

Looking ahead, the Directors are optimistic. They anticipate that the financial performance for the remaining nine months of 2025 will remain satisfactory, citing “better productivity and current stable feed cost” as key contributing factors. This suggests that the company is focusing on operational efficiencies and benefiting from more predictable input costs, which are crucial for the profitability of poultry farming.

Potential challenges might still include unexpected shifts in commodity prices (like feed), disease outbreaks, or changes in consumer demand. However, the company’s robust cash flow generation and healthy balance sheet provide a strong foundation to weather such fluctuations.

Dividends: Returning Value to Shareholders

Shareholders will be pleased to note the Board of Directors has declared a **first interim single-tier dividend of RM0.015 per share**, amounting to approximately RM8.86 million, for the current financial period. This demonstrates the company’s commitment to returning value to its shareholders, a positive indicator of financial confidence.

Additionally, the fourth interim single-tier dividend of RM0.02 per ordinary share for the financial year ended 31 December 2024, amounting to approximately RM11.83 million, was paid on 20 March 2025.

What are your thoughts on TEO SENG CAPITAL BERHAD’s latest performance? Do you believe their focus on productivity and stable feed costs will be enough to sustain growth in the coming quarters? Share your insights in the comments section below!