TA WIN HOLDINGS BERHAD Navigates Challenging Waters: A Deep Dive into Q3 FY2025 Performance

Core Financial Highlights: A Quarter of Deep Losses

TA WIN HOLDINGS BERHAD’s Q3 FY2025 results reveal a challenging period, marked by a substantial increase in losses despite a mixed revenue performance. The company faced significant headwinds that impacted its bottom line.

Quarterly Performance (3 Months Ended 31 March)

For the third quarter, revenue saw a slight dip of approximately 6.1% compared to the same period last year. However, the most striking change was the dramatic shift from a gross profit of RM1.81 million last year to a gross loss of RM1.26 million this quarter. This, combined with a colossal increase in administrative expenses, propelled the loss before tax from RM5.36 million to a staggering RM58.12 million. This represents an increase in loss of over 980% quarter-on-quarter, a significant deterioration in profitability.

Cumulative Performance (9 Months Ended 31 March)

Looking at the nine-month cumulative period, revenue actually increased by about 11.9% to RM522.64 million. However, similar to the quarterly trend, the company swung from a gross profit of RM5.92 million to a gross loss of RM7.17 million. The cumulative loss before tax ballooned from RM15.68 million to an alarming RM79.13 million, indicating that the challenges faced in Q3 were not isolated and have significantly impacted the year-to-date performance.

A closer look at the financial statements reveals that the substantial increase in losses is primarily attributable to a massive surge in administrative expenses. While the report doesn’t break down these expenses in detail within the P&L, the cash flow statement provides clues through significant non-cash adjustments. These include:

• Provision for impairment loss on investment: RM16.68 million
• Provision for impairment loss on receivables: RM9.99 million
• Provision for impairment loss on property, plant and equipment: RM19.28 million
• Loss on disposal of property, plant and equipment: RM3.00 million
• Fair value loss on derivative financial instrument: RM0.89 million

These substantial impairment charges and losses, totaling over RM49 million, are likely significant components of the increased administrative expenses, impacting the reported profit/loss figures heavily.

Financial Position: A Shrinking Balance Sheet

As at 31 March 2025, the company’s financial position reflects the challenging period:

The total assets have decreased by 21%, and more notably, total equity has declined by over 31% since June 2024. This has directly impacted the net asset per share, which fell from RM0.069 to RM0.045. The significant reduction in Property, Plant and Equipment (from RM173.24 million to RM100.52 million) and the increase in Non-current assets held for sale (from RM20.85 million to RM44.50 million) suggest potential asset divestment strategies or reclassification due to the aforementioned impairment provisions.

Cash Flow: A Glimmer of Operational Positivity

Despite the substantial reported losses, the cash flow statement offers a nuanced perspective:

Encouragingly, the company managed to generate net cash from operating activities of RM355k for the nine-month period, a significant improvement from the RM17.22 million cash used in operations during the same period last year. This positive shift in operating cash flow, despite the large net loss, is due to the non-cash nature of many of the impairment charges. Cash used in investing activities also decreased. However, cash generated from financing activities was substantially lower compared to the previous year, reflecting different financing needs or strategies.

Risks and Future Outlook

The financial report highlights several critical areas that warrant attention from investors:

• Significant Losses: The primary concern is the substantial net loss, largely driven by significant impairment charges on investments, receivables, and property, plant and equipment. While these are often non-cash, they reflect a reduction in asset values and future earning potential.
• Gross Profit to Loss Shift: The consistent shift from gross profit to gross loss indicates fundamental challenges in the company’s core operations or cost management.
• Decreasing Equity and Net Asset Value: The erosion of total equity and net asset per share signals a weakening financial foundation, which could impact future borrowing capacity or investor confidence.

To navigate these challenges, TA WIN HOLDINGS BERHAD will likely need to focus on:

1. Operational Efficiency: Addressing the underlying issues contributing to the gross losses and controlling administrative expenses beyond the one-off impairments.
2. Asset Realization: The increase in “Non-current assets held for sale” suggests a strategy to divest assets. Successful execution of these sales could improve liquidity and potentially reduce future impairment risks.
3. Market Adaptation: Given the mixed revenue performance, the company needs to adapt to market dynamics to ensure sustainable top-line growth.

The company’s ability to generate positive operating cash flow, despite the reported losses, is a positive indicator of its underlying cash generation capabilities, after accounting for non-cash expenses. However, the magnitude of the losses from impairments cannot be overlooked.