Navigating the Headwinds: A Deep Dive into Gabungan AQRS Berhad’s Third Quarter 2025 Performance
Greetings, fellow investors and market enthusiasts! Today, we’re unravelling the latest financial report from Gabungan AQRS Berhad (GAQRS), a prominent player in Malaysia’s construction and property development sectors. The third quarter results, ending 31 March 2025, paint a picture of a company facing a challenging operating environment, reflected in a notable dip in profitability. However, a closer look reveals strategic maneuvers and promising long-term prospects that warrant our attention. Let’s break down the numbers and understand what this means for the company’s journey ahead.
Core Financial Highlights: A Mixed Bag
GAQRS’s performance in the third quarter of the financial year ending 30 June 2025 showed a contraction in revenue and a deeper loss compared to the immediate preceding quarter. This was primarily influenced by the construction division’s projects nearing completion, leading to lower contribution. Additionally, the property development segment faced significant liquidated ascertained damages (LADs), impacting overall profitability.
Third Quarter Performance (3 Months Ended 31 March 2025 vs. 31 December 2024)
Current Quarter (31 March 2025)
Revenue: RM41.1 million
Loss Before Tax: RM4.1 million
Loss After Taxation: RM7.9 million
Immediate Preceding Quarter (31 December 2024)
Revenue: RM70.8 million
Loss Before Tax: RM0.37 million
Loss After Taxation: RM2.6 million
This represents a significant decrease of 41.9% in revenue and a substantial increase in losses for the quarter. The report highlights that the lower revenue was mainly due to reduced contributions from the construction division, as most of its projects are reaching their tail end.
Cumulative Performance (9 Months Ended 31 March 2025 vs. 31 March 2024)
Current Period (9 Months Ended 31 March 2025)
Revenue: RM151.3 million
Loss Before Tax: RM10.2 million
Profit for the Financial Period: RM(16.2) million
Basic Earnings Per Share: (2.98) sen
Corresponding Period (9 Months Ended 31 March 2024)
Revenue: RM376.0 million
Profit Before Tax: RM26.8 million
Profit for the Financial Period: RM16.8 million
Basic Earnings Per Share: 3.10 sen
Comparing the nine-month periods, GAQRS saw a substantial decline in revenue and a shift from profit to loss. This underscores the impact of the ongoing transition as major projects conclude and new ones are brought online.
Segmental Performance: Construction Holds Steady, Property Faces Challenges
Breaking down the performance by business units provides deeper insights into the Group’s operations:
Construction Segment
The construction division generated RM42.7 million in revenue for the current quarter, a 51.1% decrease from the immediate preceding quarter’s RM87.3 million. This was primarily driven by the progress of key projects such as The Peak, Bandar Enstek School, and Solitaire Suites. Despite the revenue decline, the segment maintained a healthy profit before tax margin of 17.7%, reporting RM7.6 million in profit before tax for the quarter.
Property Development Segment
The property development segment recorded RM8.3 million in revenue, a significant improvement from RM3.0 million in the immediate preceding quarter, mainly from The Peak and E’Island Lake Haven projects. However, the segment reported a loss before tax of RM9.8 million. This loss was largely due to the recognition of Liquidated Ascertained Damages (LADs) amounting to RM11.8 million for The Peak (RM7.3 million) and E’Island (RM4.5 million).
Financial Health: Managing Debt and Cash Flow
As at 31 March 2025, GAQRS’s total assets stood at RM1,408.1 million, an increase from RM1,250.0 million as at 30 June 2024. However, total equity saw a slight decrease to RM503.9 million from RM520.1 million. The net assets per share also saw a slight decline to RM0.93 from RM0.96.
Balance Sheet Snapshot (RM’000)
| Item | As at 31 March 2025 | As at 30 June 2024 |
|---|---|---|
| Total Assets | 1,408,136 | 1,250,022 |
| Total Equity | 503,891 | 520,073 |
| Total Liabilities | 904,245 | 729,949 |
| Net Assets per Share (RM) | 0.93 | 0.96 |
The Group’s total borrowings increased to RM315.5 million (from RM235.3 million as at 30 June 2024), largely due to the drawdown of a term loan facility for The Peak project. Despite this, cash and cash equivalents increased to RM125.1 million. This resulted in a gross gearing of 0.63 times and a net gearing of 0.38 times, which are manageable levels for a company in this sector.
Strategic Outlook and Future Prospects
Despite the current quarter’s challenges, GAQRS is strategically positioned for future growth, backed by a robust pipeline of projects and a clear focus on strengthening its financial position.
Future Revenue and Project Handover
The Group anticipates recognizing a total of RM1.2 billion in future gross revenue, with RM335.3 million from the construction division and a substantial RM907.6 million from property development. The upcoming handover of two key projects, LRT3 and E’Island Lake Haven, is expected to significantly bolster the Group’s cash flow. The completion and certification of LRT3 will release RM17.7 million in retention sum, while the handover of E’Island Lake Haven is projected to generate RM74.6 million in gross cash flow from sold units.
Construction Division Outlook
The construction division holds an outstanding orderbook of RM335.3 million, which is expected to sustain earnings and cash flow contributions until the financial year ending 2026. The focus remains on executing and completing ongoing projects while finalizing claims for completed ones. The company is actively exploring new government and private construction projects, with a disciplined approach to risk-reward assessment.
Property Development Division Outlook
As of 20 May 2025, the Group achieved RM2.2 million in property sales from E’Island Lake Haven. Total sold and unbilled sales as at 31 March 2025 stand at RM190.7 million, which will be progressively recognized through the end of 2025. The division is actively developing projects with a gross development value (GDV) of RM1.1 billion, including E’Island Lake Haven (95% take-up rate) and The Peak (40% take-up rate). A significant upcoming launch is Serena Gambang, a 100-acre landed township in Kuantan with a GDV of RM400 million, targeted for launch in the first quarter of calendar year 2026. The Peak, with its 403 unsold units (estimated GDV RM459.0 million) and strategic location in Johor Bahru, is targeting Malaysians working in Singapore, Singaporeans, and MM2H participants, especially with the upcoming Johor Bahru – Singapore Rail Transit System (RTS).
Material Litigations: A Key Area to Monitor
The report also highlights three ongoing material litigations, involving significant claims. These include a case against a former executive director for negligence and breach of contract (RM13.2 million claim), another against various defendants for negligence and breach of employment contracts related to the Paloma Project (RM14.3 million claim), and a new suit against Turnpike Synergy Sdn Bhd and others related to the SUKE Project with a substantial claim of RM501.3 million. While these are ongoing and their outcomes uncertain, they represent potential liabilities that investors should keep an eye on.
Summary and
Gabungan AQRS Berhad’s third quarter 2025 results reflect a period of transition and challenges, particularly with the winding down of major construction projects and the impact of LADs on the property segment. However, the Group has a clear strategic direction, focusing on monetizing its existing property inventory, launching new developments like Serena Gambang, and securing new construction contracts. The increase in borrowings to fund project development is a calculated move, and the expected cash inflows from project handovers are crucial for strengthening the balance sheet.
While the current financial performance shows a loss, the underlying business fundamentals, such as a substantial future revenue pipeline and a manageable gearing ratio, suggest resilience. The company’s efforts to intensify marketing for The Peak and prepare for the Serena Gambang launch indicate a proactive approach to drive future growth. However, the ongoing material litigations present a notable risk that warrants careful monitoring.
Key points from the report that stand out include:
- The significant future gross revenue pipeline of RM1.2 billion, providing long-term visibility.
- Expected cash flow enhancement from the LRT3 retention sum release and E’Island Lake Haven handover.
- Proactive steps in the property division with intensified marketing for The Peak and the upcoming launch of Serena Gambang.
- The manageable gross and net gearing ratios, indicating a healthy financial structure despite increased borrowings.
- The ongoing material litigations, which represent potential financial risks that need to be tracked.
It is important for investors to consider both the short-term headwinds and the long-term strategic initiatives when evaluating GAQRS.
What’s Next for Gabungan AQRS?
Gabungan AQRS is clearly at a pivotal juncture, navigating the tail end of existing projects while laying the groundwork for new growth engines. The success of their property development launches, particularly Serena Gambang, and their ability to secure new construction contracts will be key determinants of their future trajectory. Furthermore, the outcomes of the ongoing litigations will be important to watch.
What are your thoughts on Gabungan AQRS’s latest performance? Do you believe their strategic focus on new property developments and securing fresh construction contracts will enable them to regain momentum in the coming quarters? Share your insights and perspectives in the comments section below!
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