Life Water Berhad’s Q3 FY2025: Navigating Growth Amidst Shifting Tides
Greetings, fellow investors! Today, we’re diving deep into the latest financial report from Life Water Berhad for its third quarter ended 31 March 2025. This report offers a fresh look at the company’s performance since its recent listing on Bursa Malaysia, highlighting its strategic expansion plans and the immediate challenges it faces. While the long-term vision appears robust, the latest quarter reveals some interesting dynamics. Let’s explore the numbers and what they mean for this Malaysian beverage powerhouse.
Core Data Snapshot: Q3 FY2025 & Year-to-Date
For the third quarter ended 31 March 2025, Life Water Berhad recorded a revenue of RM43.12 million. Looking at the cumulative nine-month period, the company achieved a solid revenue of RM128.42 million. The beverage segment continues to be the primary driver, with drinking water accounting for a significant 82.59% of total revenue in the current quarter, followed by carbonated drinks at 17.00%.
Profit before tax (PBT) for the quarter stood at RM8.11 million, leading to a net profit after tax (PAT) of RM6.48 million. The earnings per share for the quarter was 1.37 sen. For the nine-month period, PBT was RM25.95 million and PAT was RM20.97 million, with an earnings per share of 4.43 sen.
It’s important to note that as this is one of the first financial reports since the company’s listing, comparative figures for the same period last year are not available.
Quarter-on-Quarter Performance: Q3 FY2025 vs. Q2 FY2025
A closer look at the immediate preceding quarter (Q2 FY2025 ended 31 December 2024) provides valuable insights into recent trends:
Current Quarter (Q3 FY2025)
Revenue: RM43,117,000
Gross Profit: RM19,515,000
Profit Before Tax: RM8,110,000
Profit After Tax: RM6,482,000
GP Margin: 45.26%
PBT Margin: 18.81%
PAT Margin: 15.03%
Immediate Preceding Quarter (Q2 FY2025)
Revenue: RM42,713,000
Gross Profit: RM20,922,000
Profit Before Tax: RM8,883,000
Profit After Tax: RM6,991,000
GP Margin: 48.98%
PBT Margin: 20.80%
PAT Margin: 16.37%
While revenue saw a slight increase of 0.95% (RM0.40 million), primarily due to higher sales of carbonated and fruit drinks during the festive season, the profit margins experienced a dip. Gross Profit declined by 6.72%, and Profit Before Tax fell by 8.70%. This was attributed to the implementation of the minimum wage policy, which increased costs that could not be immediately passed on to customers. Additionally, the Group’s rapid expansion and ongoing upgrading plans temporarily impacted operational efficiency, contributing to the lower gross profit and margins.
Financial Health: A Snapshot of the Balance Sheet
Life Water Berhad’s balance sheet as at 31 March 2025 shows significant growth. Total assets expanded to RM319.07 million from RM243.08 million at 30 June 2024. This increase is largely driven by investments in property, plant, and equipment, reflecting the company’s expansion initiatives.
Total equity also saw a substantial rise to RM199.70 million from RM122.01 million, a direct result of the recent IPO and corporate acquisitions. It’s important for investors to understand the change in Net Assets per share, which moved from RM18.21 at 30 June 2024 to RM0.42 at 31 March 2025. This is not a reflection of declining value, but rather a recalculation based on the significantly increased number of shares issued post-IPO and acquisitions (from 6.7 million shares to 473.18 million shares).
Cash and bank balances stood at RM11.24 million, with a notable increase in short-term funds to RM89.26 million, indicating a healthy liquidity position despite a net decrease in overall cash and cash equivalents of RM5.21 million for the period, primarily due to substantial investing activities.
Strategic Expansion and Future Outlook
Life Water Berhad is clearly in an aggressive expansion phase, aiming to capture growing demand in East Malaysia. Several key initiatives are underway:
- Increased Production Capacity: The new Keningau plant, operational since early 2025, adds 59 million litres to annual drinking water capacity, bringing the total to 448 million litres. A new manufacturing line at the Sandakan Sibuga Plant 1 is expected to commence operations in the second half of 2025, adding another 178 million litres and boosting total annual capacity by 40% to 626 million litres. These expansions are strategically funded by IPO proceeds.
- Enhanced Production Efficiency: The Group is investing in two PET Preform Injection machines at its KK IZ8 Plant. The first is already operational, and the second, designed for larger 5.7-litre and new 10-litre bottles, will start in the second half of the year. This move is set to reduce reliance on external suppliers, streamline costs, and improve margins.
- Diversification into Adjacent Segments: A significant development is the acquisition of Twinine Sdn Bhd, a profitable sauces and condiments manufacturer. This strategic move allows Life Water to expand into a new fast-moving consumer goods (FMCG) segment, leveraging its existing distribution network. A new manufacturing facility for Twinine is also planned.
- Distribution Network Strengthening: The Tawau Distribution Centre remains under development, promising to enhance delivery capabilities across East Malaysia.
Management remains cautiously optimistic, anticipating drinking water to remain the key revenue driver while the new sauces and condiments segment contributes progressively. The positive market trends in Malaysia, including forecasted consumer spending growth (5.2% year-on-year for 2025), population increase, a 23% growth in manufactured beverages sales since 2021, rising household incomes in Sabah, and a recovering tourism sector, all bode well for the Group’s future demand.
Addressing Challenges and IPO Proceeds Utilization
Despite the positive outlook, the company acknowledges “upward pressure on operating costs,” such as minimum wage adjustments. Life Water plans to mitigate these impacts through pricing strategies and production efficiencies. The recent dip in gross profit and PBT margins quarter-on-quarter underscores the immediate effects of these cost pressures and the temporary impact of rapid expansion on operational efficiency.
The company successfully raised approximately RM63.42 million from its IPO. As at 31 March 2025, RM29.25 million has been utilised for key initiatives including the purchase of a PET injection moulding machine, setting up part of the new drinking water manufacturing line at Sandakan Sibuga Plant 1, working capital, and listing expenses. A balance of RM34.17 million remains for future strategic deployments.
On a positive note, a material litigation involving Green Borneo Industries Sdn Bhd has been successfully concluded with full settlement and recovery of property, demonstrating the company’s ability to navigate legal challenges effectively.
Summary and
Life Water Berhad’s third-quarter report paints a picture of a company in an active growth phase, strategically expanding its production capabilities and diversifying its product portfolio. The significant investments in new plants, manufacturing lines, and the acquisition of Twinine Sdn Bhd underscore a clear long-term vision to capitalize on Malaysia’s robust consumer market and tourism recovery, especially in East Malaysia.
While the recent quarter-on-quarter performance showed a temporary dip in profit margins due to rising operating costs and the short-term impact of aggressive expansion, the company has outlined clear strategies to address these challenges through pricing and efficiency improvements. The successful resolution of a material litigation also highlights sound operational management.
Key points from this report:
- Aggressive capacity expansion in drinking water production, aiming for a 40% uplift.
- Strategic vertical integration with new PET injection machines to enhance efficiency and reduce reliance on external suppliers.
- Diversification into the profitable sauces and condiments market through the Twinine acquisition.
- Positive market fundamentals in Malaysia supporting demand growth.
- Management’s commitment to mitigating cost pressures through strategic pricing and operational efficiencies.
It’s important for investors to monitor how effectively Life Water Berhad manages the integration of its new acquisitions and brings its expanded facilities to full operational efficiency, especially in light of ongoing cost pressures. The company’s ability to translate its ambitious expansion plans into sustained earnings growth will be key.
From a blogger’s perspective, Life Water Berhad presents a fascinating case study of a recently listed company executing a bold growth strategy. The slight profit dip in the latest quarter could be seen as a growing pain associated with significant expansion, rather than a fundamental weakness. The strategic use of IPO proceeds and the diversification into a complementary FMCG segment through the Twinine acquisition are particularly encouraging signs of forward-thinking management.
Do you think Life Water Berhad can effectively integrate its new acquisitions and operational expansions to overcome the current cost pressures and fully capitalize on the promising market trends in Malaysia? Share your thoughts in the comments below!
Stay tuned for more updates on Malaysian companies!
