GOPENG BERHAD Q1 2025: A Bright New Chapter with Solar, But Finance Costs Loom Large
GOPENG BERHAD, a familiar name in Malaysia’s diverse economic landscape, has just unveiled its First Quarter 2025 financial results, and there’s a lot to unpack. The report signals a significant shift in the company’s revenue landscape, primarily driven by the full operational contribution of its new solar energy segment. While this has led to a remarkable surge in top-line growth and a turnaround in operating profit, the bottom line tells a different story, impacted by substantial finance costs. This quarter truly highlights GOPENG’s transition and the challenges that come with it.
Q1 2025 Financial Snapshot: Revenue Soars, But Net Loss Widens
Let’s start with the headline numbers for the quarter ended 31 March 2025, compared to the same period last year:
Q1 2025
Revenue: RM8.16 million
Operating Profit: RM0.43 million
Profit Before Tax: (RM2.07 million)
Net Loss (Attributable to Owners): (RM2.06 million)
Loss Per Share: (0.51 sen)
Q1 2024
Revenue: RM2.66 million
Operating Loss: (RM0.98 million)
Profit Before Tax: (RM0.98 million)
Net Loss (Attributable to Owners): (RM0.97 million)
Loss Per Share: (0.24 sen)
The numbers clearly show a mixed bag. Revenue skyrocketed by an impressive 207%, jumping from RM2.66 million to RM8.16 million. This massive boost also helped the company swing from an operating loss of RM0.98 million last year to an operating profit of RM0.43 million this quarter. This is a significant operational turnaround.
However, despite the strong top-line and operating performance, the company recorded a higher pre-tax loss of RM2.07 million, compared to RM0.98 million in the same period last year. This widening loss is primarily attributed to a massive increase in finance costs, which surged from RM4,977 to RM2.57 million. This substantial jump in finance costs is a critical factor, mainly stemming from interest on amounts owed to the Engineering, Procurement, Construction and Commissioning (EPCC) contractor for the LSS4 Solar power plant.
Segmental Performance: The Dual Engines of Growth
GOPENG’s business is now primarily driven by two segments: Plantation and the newly operational Solar energy. Let’s look at how each performed:
Plantation Segment: Resilient Amidst Price Swings
The plantation segment continues to be a steady contributor. Revenue from this segment increased by 19.0%, from RM2.66 million in Q1 2024 to RM3.17 million in Q1 2025. This growth was largely propelled by a significant increase in the average Fresh Fruit Bunch (FFB) price, which rose by 26.5% to RM1,015 per metric tonne. This helped offset a slight reduction in FFB production, which saw a 3.9% decrease to 3,118 MT this quarter.
Cost of sales for the plantation segment also saw a 13% increase to RM1.63 million, primarily due to the final round of the 2024 manuring program being brought forward to January and February 2025.
Solar Segment: A Bright New Chapter
The star performer this quarter is undoubtedly the solar segment. Having achieved its Commercial Operation Date (COD) on 22 May 2024, the LSS4 Solar power plant contributed its first full quarter of revenue, bringing in a substantial RM4.99 million. This segment alone accounted for 61% of the Group’s total revenue for the quarter. The cost of sales for the solar segment was RM3.30 million, which includes the amortisation of the solar plant, staff costs, security, maintenance, and power generation expenses.
The inclusion of this new segment has fundamentally reshaped GOPENG’s revenue profile and is expected to be a significant long-term contributor to the Group’s top-line and cash flow.
Financial Health Check: Assets, Liabilities, and Cash Flow
A look at the balance sheet and cash flow statements provides further insights into the company’s financial standing and operational efficiency:
Balance Sheet (as at 31 March)
| Item | 31 March 2025 (RM) | 31 March 2024 (RM) |
|---|---|---|
| Total Assets | 639,194,846 | 628,490,528 |
| Total Equity | 395,995,642 | 377,402,728 |
| Total Liabilities | 243,199,204 | 251,087,800 |
Total assets saw a slight increase, while total liabilities decreased, indicating a healthier balance sheet structure. A notable new entry on the asset side is the “Concession asset” valued at RM228.29 million. This reflects the right granted to the Group as the operator of the LSS4 Solar power plant under the Renewable Energy Power Purchase Agreement (REPPA) with Tenaga Nasional Berhad (TNB), which has a revised concession period of 25 years.
Cash Flow Statement (for the period ended 31 March)
| Item | 31 March 2025 (RM) | 31 March 2024 (RM) |
|---|---|---|
| Net cash flow from operating activities | 2,601,165 | 194,600 |
| Cash flow used in investing activities | (10,086,594) | (383,189) |
| Cash flow used in financing activities | (2,346,224) | (4,977) |
| Net increase/(decrease) in cash and cash equivalents | (12,432,818) | (388,166) |
The Group demonstrated a significant improvement in cash generated from operations, with net cash flow from operating activities increasing from RM0.19 million to RM2.60 million. This is a positive sign of the underlying operational strength of the businesses. However, the cash flow statements also reveal higher cash outflows from investing activities (RM10.09 million) and financing activities (RM2.35 million). These outflows are directly related to the substantial investments made in the LSS4 Solar power plant, including the EPCC payments and associated interest costs, leading to a larger net decrease in cash and cash equivalents for the period.
Risks and Future Prospects: Navigating a New Horizon
GOPENG BERHAD is clearly at a pivotal juncture, with its strategic shift towards renewable energy now bearing fruit in terms of revenue. The LSS4 Solar power plant is expected to be a significant long-term contributor to the Group’s revenue and cash flow, providing a new, stable income stream for the next 25 years.
The company is also actively exploring opportunities to acquire other solar energy plants or assets, indicating a clear strategic direction to expand its footprint in the renewable energy sector. This proactive approach could further diversify its income base and strengthen its position in the green economy.
However, the financial report highlights a key challenge: the soaring finance costs. While the solar plant is a strategic asset, the associated financing structure, particularly the interest on amounts due to the EPCC contractor, is currently impacting the Group’s profitability. The company is in the process of raising finance via a Sukuk Wakalah Programme (ASEAN Green SRI Sukuk) with RHB Investment Bank to manage and repay the amount due to the EPCC contractor. The success of this financing initiative will be crucial in alleviating the pressure on the Group’s bottom line.
For its traditional plantation segment, the company will continue to navigate the inherent volatility of FFB prices and production yields, which are subject to market and environmental factors.
Summary and
GOPENG BERHAD’s First Quarter 2025 report paints a picture of a company in transition, successfully executing a strategic pivot towards renewable energy. The new solar segment has delivered a remarkable boost to revenue and operational profit, showcasing its potential as a core growth driver. This is a commendable achievement in diversifying the company’s income streams and tapping into the growing demand for green energy.
However, the significant increase in finance costs, largely tied to the solar project’s development, has undeniably impacted the net profit, resulting in a widened loss for the quarter. The company’s ability to manage and optimize these financing costs, potentially through the ongoing Sukuk issuance, will be key to translating its strong operational performance into sustainable profitability.
Key points from this report include:
- Exceptional revenue growth driven by the new solar energy segment.
- A positive turnaround in operating profit, indicating strong operational performance from both plantation and solar businesses.
- A significant increase in finance costs that led to a higher net loss for the quarter.
- The company’s strategic focus on expanding its renewable energy portfolio.
- A recommended final single-tier dividend of 1.0 sen per ordinary share for FY2024, subject to shareholder approval.
The coming quarters will be critical in observing how GOPENG BERHAD manages its financial leverage and integrates the full benefits of its solar assets into its overall profitability.
From a professional standpoint, GOPENG BERHAD is demonstrating clear strategic execution in diversifying its business towards a high-growth sector. The strong revenue and operational cash flow from the new solar segment are positive indicators of its potential. The challenge, as highlighted, lies in the financing structure of this new venture. Successfully refinancing or managing these costs will be pivotal for the company to fully realize the benefits of its strategic shift.
With the solar segment now fully operational and contributing significantly, do you think GOPENG BERHAD can effectively manage its finance costs and turn profitable in the coming quarters? What are your thoughts on their dual-engine strategy and their move into renewable energy?
Share your insights and perspectives in the comments below!
