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ERDASAN Group Berhad: A Remarkable Turnaround Amidst Strategic Shifts and Lingering Challenges
ERDASAN Group Berhad (formerly known as AT Systematization Berhad) has just unveiled its unaudited interim financial report for the period ended 31 March 2025, marking the close of its financial year (FY2025). The report reveals a significant swing from losses to profitability, driven by strategic business realignment and a notable fair value gain. While the overall picture shows a commendable turnaround, the company also navigates evolving market dynamics and addresses historical financial irregularities.
Let’s dive into the key highlights from their latest financial performance.
Core Data Highlights: A Path to Profitability
ERDASAN Group’s performance for the current quarter (3 months ended 31 March 2025) and the full financial year (12 months ended 31 March 2025) showcases a strong rebound, particularly in profitability. This improvement is a welcome sight after previous periods of losses.
Quarterly Performance (Q4 FY2025 vs Q4 FY2024)
For the fourth quarter, the Group saw a substantial increase in revenue and a dramatic shift to pre-tax profit:
Q4 FY2025
Revenue: RM8.137 million
Pre-Tax Profit: RM28.800 million
Net Profit: RM25.763 million
Basic EPS: 11.26 sen
Q4 FY2024
Revenue: RM4.868 million
Pre-Tax Loss: RM(62.749) million
Net Loss: RM(62.829) million
Basic EPS: (27.78) sen
This represents a remarkable 67% increase in revenue and a significant RM91.55 million turnaround in pre-tax profit compared to the same quarter last year.
Full Year Performance (FY2025 vs FY2024)
Looking at the cumulative performance for the full financial year, the Group has successfully moved from a substantial loss to a positive profit:
| Financial Metric | FY2025 (RM ‘000) | FY2024 (RM ‘000, Restated) | Change (RM ‘000) | Change (%) |
|---|---|---|---|---|
| Revenue | 31,116 | 32,585 | (1,469) | (5%) |
| Gross Profit/(Loss) | 3,360 | (2,311) | 5,671 | Turnaround |
| Profit/(Loss) before Tax | 10,882 | (79,455) | 90,337 | Turnaround (114%) |
| Profit/(Loss) for the Period | 7,845 | (79,797) | 87,642 | Turnaround |
| Basic Earnings/(Loss) per Share (sen) | 3.45 | (35.34) | 38.79 | Turnaround |
While full-year revenue saw a slight dip of 5%, the significant turnaround in profitability underscores the Group’s strategic adjustments and operational improvements.
Segmental Performance: Key Drivers of Change
Fabrication and Automation
This segment has been a strong performer. For Q4 FY2025, revenue surged by 94% to RM7.97 million, leading to a pre-tax profit of RM1.46 million, a significant turnaround from a RM3.30 million loss in Q4 FY2024. Cumulatively, revenue for FY2025 grew 1% to RM30.43 million, and the pre-tax loss narrowed significantly by 79% to RM1.64 million. This improvement was driven by higher orders from contract manufacturers and textile machine makers, coupled with enhanced profit margins and operational efficiency.
Renewable Energy and Property Letting
This segment saw a massive increase in pre-tax profit, reaching RM29.69 million in Q4 FY2025 (up from RM0.10 million in Q4 FY2024) and RM20.73 million for the full year (up from RM0.61 million in FY2024). The primary driver for this surge was a fair value gain on investment properties amounting to RM30.35 million. Higher rental income also contributed positively, though partially offset by depreciation of glove facilities, and for the full year, losses on disposal of glove lines and glove stock write-offs.
Gloves Segment
The Group has discontinued its glove-making operations and integrated its glove facilities into the renewable energy and property letting segments. This strategic exit is reflected in the segment’s zero revenue for the current period, which previously contributed RM1.63 million in FY2024.
Other Segments
Losses in the “Others” segment significantly narrowed, improving by 92% in Q4 and 79% for the full year. This was mainly due to the absence of substantial mark-to-market losses on quoted investments (RM35.05 million in prior year) and lower share of losses from associates. However, this was partially offset by the absence of a one-off gain from the deemed disposal of an associate in the prior year and higher unrealised foreign exchange losses.
Financial Health: Balance Sheet and Cash Flow
As at 31 March 2025, ERDASAN Group’s total assets stood at RM190.52 million, a slight increase from RM184.31 million last year. Total equity also improved to RM150.81 million from RM132.01 million. However, it’s worth noting that Net Assets per share decreased to 65.92 sen from 74.23 sen. This is primarily due to a significant RM260 million reduction in share capital during the period, which was used to offset accumulated losses, impacting the per-share metric despite the overall increase in total equity.
In terms of cash flow, the Group utilized RM11.78 million from operating activities for the full year. However, investing activities generated a healthy RM15.28 million, largely due to proceeds from the disposal of property, plant and equipment. Financing activities saw a net outflow of RM3.26 million, mainly due to repayments of term loans.
A Critical Note: Prior Year Adjustments and Litigation
A significant disclosure in this report is the restatement of prior year financial statements. The Group identified “irregular transactions” in previous years that led to an overstatement of assets and/or profit or loss. These transactions, amounting to RM46.47 million, are now the subject of a civil suit initiated by ERDASAN Group and its subsidiary against a former Executive Director, Mr. Mak Siew Wei. This material litigation is ongoing and reflects the Group’s efforts to address and rectify past financial discrepancies.
Risk and Prospect Analysis: Navigating the Future
ERDASAN Group remains optimistic about its future, buoyed by a positive economic outlook for Malaysia and strategic business developments. The Malaysian economy is projected to grow between 4.5% and 5.5% in 2025, with the manufacturing sector, particularly the Electrical and Electronics (E&E) segment, expected to expand further due to increasing external demand.
The Group’s fabrication and automation segment is well-positioned to capitalize on this, with a healthy backlog of orders totaling RM20.94 million, representing approximately 67.31% of its 12-month unaudited revenue. The company is actively leveraging its capabilities in “transfer business” (helping customers relocate orders to Malaysia for cost optimization) and is now tapping into “migration business,” driven by customers moving entire operations to Malaysia, potentially in response to US tariffs.
Despite this positive outlook, the broader manufacturing industry faces potential headwinds. These include escalating geopolitical tensions, supply chain disruptions, volatility in financial market conditions, and ongoing changes in US tariffs policy. To mitigate these risks, ERDASAN Group continues to prioritize operational efficiency, automation, and cost optimization to preserve margins amidst competitive pressures.
The Board expresses confidence that its proactive business development strategy and strong customer relationships will sustain its growth momentum in the coming quarters.
Summary and Outlook
ERDASAN Group Berhad’s latest financial report paints a picture of a company undergoing significant transformation and emerging stronger. The impressive swing to profitability, particularly driven by the fair value gain on investment properties and the strong performance of its fabrication and automation segment, highlights successful strategic realignments, including the exit from the glove business.
However, the journey is not without its complexities. The ongoing litigation concerning prior year financial irregularities serves as a reminder of past challenges that the company is actively addressing. Looking ahead, the Group’s focus on operational efficiency, market segment alignment, and leveraging global supply chain shifts positions it well to navigate the evolving economic landscape.
Key points from this report include:
- Significant turnaround from losses to profit for both the quarter and full financial year.
- Strong performance in the Fabrication and Automation segment, driven by increased orders and efficiency.
- Major boost to profitability from a fair value gain on investment properties in the Renewable Energy and Property Letting segment.
- Strategic discontinuation of the glove manufacturing operations.
- Ongoing legal action to address and rectify historical financial irregularities.
- A positive outlook for the Malaysian economy and the E&E sector, providing tailwinds for the Group’s core businesses.
- Continued focus on operational efficiency and leveraging “transfer” and “migration” business opportunities.
Final Thoughts
The latest report from ERDASAN Group Berhad demonstrates a company that is actively restructuring and adapting to market realities. The shift from a loss-making entity to a profitable one is a significant achievement, indicating that their strategic decisions, such as exiting the glove business and focusing on property and fabrication, are bearing fruit. The management’s proactive stance in addressing historical financial issues through litigation also signals a commitment to transparency and rectifying past wrongs.
Do you think ERDASAN Group can maintain this growth momentum in the coming years, especially given the global economic uncertainties and the ongoing legal matters? Share your thoughts in the comments below!
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