TALAM TRANSFORM BERHAD: A Quarter of Turnaround Amidst Market Headwinds

Greetings, fellow investors! Today, we’re diving into the latest financial report from TALAM TRANSFORM BERHAD for the financial period ended 31 March 2025. This report offers a compelling narrative of strategic maneuvers and a significant turnaround in quarterly performance, even as the company navigates a challenging property market. While the full year still reflects a loss, the final quarter showcased a remarkable shift from red to black, largely driven by substantial “other income.” Let’s break down the numbers and see what’s truly transforming at Talam.

Core Data Highlights: A Closer Look at the Performance

Quarterly Performance (Q4 FY2025 vs. Q4 FY2024)

TALAM TRANSFORM BERHAD demonstrated a robust quarter-on-quarter recovery, turning a significant loss into a profit.

Revenue for the current quarter surged by 49.0% year-on-year to RM23.35 million, from RM15.67 million in the same period last year. Despite this revenue growth, gross profit saw a decline of 46.9% to RM3.25 million. However, the most striking improvement was the swing from a loss before tax of RM18.25 million in the previous year’s corresponding quarter to a profit before tax of RM3.12 million. This impressive turnaround was primarily fueled by significant “other income,” including:

• Recovery of additional land premiums: RM6.74 million
• Reversal of provisions for liquidated ascertained damages: RM3.18 million
• Recovery of receivables: RM1.73 million

Full Year Performance (FY2025 vs. FY2024)

While the final quarter showed strong recovery, the full-year figures reflect ongoing challenges.

For the full financial year, group revenue decreased by 29.8% to RM43.23 million from RM61.58 million a year ago. However, the loss before tax significantly improved, reducing by RM16.03 million to RM11.91 million, down from RM27.94 million in the prior year. This reduction in losses was largely due to the “other income” factors mentioned earlier, which helped offset an increase in finance costs by RM5.04 million, attributed to a new RM21 million loan taken in the preceding financial year and one-off MFRS9 finance charges.

A positive highlight for the full year was the substantial turnaround in cash flow from operating activities, shifting from a net cash outflow of RM18.05 million in FY2024 to a net cash inflow of RM3.90 million in FY2025.

Segmental Performance: A Mixed Bag

Each business segment contributed differently to the overall performance:

• Property Development: This division was the primary driver of the quarterly turnaround. Its revenue soared by 167.7% quarter-on-quarter to RM18.55 million, largely due to the successful completion of sales for 38 units of Seroja Apartments and land sales amounting to RM3.06 million. The segment swung from a significant loss before tax of RM20.43 million in Q4 FY2024 to a profit before tax of RM3.18 million in Q4 FY2025, benefiting from the aforementioned “significant other income.”
• Property Investment and Management: This segment saw a modest revenue increase of 12.5% quarter-on-quarter to RM1.34 million. The loss before tax narrowed to RM0.19 million, compared to RM0.41 million in the same quarter last year, indicating an improvement in operational efficiency.
• Construction: This division faced headwinds, with revenue declining by 54.2% quarter-on-quarter to RM3.46 million. Consequently, profit before tax plummeted by 95.4% to RM0.12 million, reflecting a slowdown in securing new construction work.

Financial Position: Strengthening the Foundation

As at 31 March 2025, the company’s financial position showed some notable shifts:

Total assets and equity saw a slight decrease, while total borrowings were reduced by RM6.26 million year-on-year. A significant positive development is the drastic reduction in current trade and other payables, which dropped from RM334.74 million to RM72.90 million. This significantly improves the company’s short-term liquidity position.

Notably, the Net Assets Per Share (NAV) surged from RM0.05 to RM0.24. This substantial increase is primarily a result of the company’s share consolidation exercise, where every five existing shares were consolidated into one, effectively reducing the total number of outstanding shares and boosting the NAV per share. This is a key strategic move to improve the company’s capital structure and per-share metrics.

Risks and Prospects: Navigating the Future

TALAM TRANSFORM BERHAD acknowledges the challenging environment ahead for the property sector. While joint venture projects are ongoing, their pace remains slow due to the soft property market. The company has new development plans approved for various land parcels, but it is cautiously reassessing the take-up rate. This prudence stems from several factors:

• A generally weak property market.
• Tight liquidity among potential buyers.
• Strict bank lending policies, particularly impacting the B40 category of buyers.

In terms of strategic initiatives, the company has been active with corporate proposals. A private placement successfully raised RM7.722 million, which has been largely utilized for term loan repayment and operational expenses, strengthening the company’s financial footing. Furthermore, the completed share consolidation and approved share capital reduction, along with the proposed Employees’ Share Option Scheme (ESOS), are all aimed at optimizing the company’s capital structure and incentivizing its workforce.

A significant ongoing risk remains the material litigation involving Universal Healthcare (R&D) Sdn Bhd (UHSB). While TTB has successfully defended its position at both the High Court and Court of Appeal, UHSB has been granted leave to appeal to the Federal Court. The case management is ongoing, and a hearing date at the Federal Court is pending. This prolonged litigation could continue to be a drain on resources and a contingent liability for the Group.

From a professional standpoint, this report indicates that TALAM TRANSFORM BERHAD is actively addressing its historical challenges and implementing strategic measures to improve its financial standing. The shift to quarterly profitability and the improved balance sheet metrics, particularly the NAV per share, are positive signals. However, the company’s long-term success will heavily depend on its ability to navigate the persistent softness in the Malaysian property market and successfully execute its development plans.

What are your thoughts on TALAM TRANSFORM BERHAD’s turnaround? Do you think their strategic initiatives are enough to overcome the headwinds in the property sector? Share your insights in the comments below!

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