Greetings, fellow investors! Today, we’re dissecting the latest financial report from Central Global Berhad (CGB), a diversified Malaysian company with interests in construction and manufacturing & trading. The report for the fifth quarter ended 31 March 2025 (Q5 2025) paints a picture of significant growth, particularly in its construction segment, alongside strategic efforts to navigate a competitive landscape.

While the company has delivered impressive top-line and bottom-line growth this quarter, reflecting accelerated project progress, it’s also facing ongoing challenges in its manufacturing segment and managing its cash flow. Let’s break down the numbers and understand what’s truly driving CGB’s performance and what lies ahead.

Core Data Highlights: A Quarter of Remarkable Growth

Central Global Berhad delivered an outstanding performance in Q5 2025 compared to the corresponding period last year (Q1 2025). The figures clearly demonstrate a strong rebound and operational efficiency gains:

This translates to a staggering 170.44% increase in revenue and an impressive 1,224.43% jump in Profit Before Tax. Net profit saw an even more dramatic surge of 6,600%, while basic earnings per share climbed by 2,450%. This exceptional growth was primarily fueled by higher work progress in key construction projects.

Comparing Q5 2025 against the immediate preceding quarter (Q4 2024), the momentum continued:

Revenue increased by 79.29% quarter-on-quarter, and PBT soared by 502.59%. This sustained growth is largely attributed to the accelerated recognition of contract revenue from ongoing projects like the Bekalan Air Luar Bandar Project and the Pan Borneo Highway Project.

Note: The Group’s financial year end has been changed from 31 December to 30 June. As such, the next set of audited financial statements will cover an eighteen-month period from 1 January 2024 to 30 June 2025. Consequently, there is no comparative financial information available for the financial period ended 31 March 2024 for year-to-date analysis.

Diving Deeper: Segmental Performance

CGB operates primarily through two segments: Manufacturing & Trading and Construction. Their performance this quarter tells an interesting story:

Manufacturing & Trading Segment

This segment recorded a revenue of RM8.98 million in Q5 2025, a decrease from RM10.37 million in Q1 2025. The decline was due to lower local and export sales, partly a strategic move to discontinue loss-margin items. Despite the revenue dip, the segment remarkably turned a marginal profit of RM0.02 million in Q5 2025, compared to a segmental loss of RM0.52 million in Q1 2025. This turnaround highlights the positive impact of improved profit margins on certain products and the cessation of unprofitable sales.

Construction Segment

The star performer this quarter, the Construction Segment, saw its revenue skyrocket from RM18.15 million in Q1 2025 to RM68.15 million in Q5 2025. This phenomenal growth was driven by accelerated work progress on the Bekalan Air Luar Bandar Project and the commencement of work on the highly anticipated Pan Borneo Highway Project. Consequently, the segmental profit surged to RM8.49 million in Q5 2025 from RM2.29 million in Q1 2025.

For the cumulative period (YTD Q5 2025), the Construction Segment contributed significantly with RM171.29 million in revenue, including RM75.08 million from the Pan Borneo Highway Project, leading to a segmental profit of RM19.29 million.

Financial Health Check: Balance Sheet & Cash Flow

Let’s examine CGB’s financial position as of 31 March 2025 compared to 31 December 2023:

Total assets grew, driven by increases in property, plant and equipment, and contract assets. While total equity increased, the net assets per share significantly decreased from 0.48 sen to 0.14 sen. This is largely a result of the company’s share split exercise (1 into 4) and the exercise of warrants, which substantially increased the number of shares in issue. For retail investors, it’s crucial to understand that while the total value of the company’s equity has grown, it is now distributed among a much larger pool of shares.

Cash Flow Situation

The cash flow statement reveals increased outflows from operating and investing activities for the period. Net cash used in operating activities was RM(78.21) million, and in investing activities was RM(24.57) million, primarily due to significant purchases of property, plant, and equipment. However, net cash generated from financing activities saw a substantial inflow of RM71.67 million, largely from new loans and the issuance of shares.

Prospects and Risk Analysis

CGB’s outlook is a mix of promising opportunities and persistent challenges:

Manufacturing & Trading Segment Prospects

This segment continues to grapple with intense competition, leading to decreased sales and eroded profit margins. CGB’s strategy focuses on enhancing plant efficiency in terms of cost and quality to maintain competitiveness. The expected commencement of a new production line in early 2026 is anticipated to bring cost efficiencies through higher production volume and reduced wastage, which is a positive long-term development.

Construction Segment Prospects

The Construction Segment is clearly the growth engine. The company is actively accelerating work on ongoing projects such as Lahad Datu Fasa 1, Gum Gum, Bekalan Air Luar Bandar, and especially the Pan Borneo Highway Project. As of 31 March 2025, the secured unbilled order book for this segment stands at a robust approximately RM625.23 million, providing strong revenue visibility for the foreseeable future. CGB is also diligently pursuing outstanding impaired debts from past projects, signaling a commitment to financial recovery and prudent management.

Key Risks and Management Strategies

Despite the positive trajectory, CGB faces several risks. The intense competition in the manufacturing sector remains a headwind, requiring continuous innovation and cost management. The construction sector, while booming, is susceptible to project delays, cost overruns, and economic slowdowns. Furthermore, the significant outstanding impaired debts and ongoing litigation highlight past challenges that the company is actively addressing.

CGB’s strategies to mitigate these risks include streamlining operational workflows, re-negotiating supplier terms, maintaining prudent management practices, and consolidating its market position to seize new opportunities. The active pursuit of outstanding debts is crucial for improving cash flow and financial stability.

Summary and

Central Global Berhad’s Q5 2025 report showcases a period of substantial growth, predominantly driven by its robust Construction Segment. The company has demonstrated impressive top-line and bottom-line expansion, reflecting successful project execution and efforts in cost rationalization. The substantial unbilled order book in construction provides a clear runway for future revenue generation.

However, investors should also be mindful of the challenges. The Manufacturing & Trading segment continues to face stiff competition, and while strategic adjustments are underway, it remains an area requiring close monitoring. The Group’s cash flow position, with a negative cash and cash equivalents balance, indicates a reliance on borrowings, which is a financial health aspect to consider. Furthermore, the ongoing material litigations, while actively managed, represent potential financial impacts and operational distractions.

Key points from this report to consider:

1. Exceptional revenue and profit growth in Q5 2025, primarily from the Construction Segment.
2. Strategic turnaround in the Manufacturing & Trading segment, despite lower sales, by focusing on profitable items.
3. A strong secured unbilled order book of RM625.23 million in the Construction segment, ensuring future revenue visibility.
4. Diligent efforts to recover outstanding impaired debts and manage ongoing litigations.
5. A negative cash and cash equivalents balance, indicating a need for careful liquidity management and potential reliance on financing.
6. Significant increase in shares in issue due to share split and warrant conversions, impacting per-share metrics.

The company’s strategic focus on accelerating project progress and enhancing operational efficiencies across its segments positions it for continued growth, provided it can effectively navigate the competitive pressures and liquidity challenges.