TECHNA-X BERHAD Q3 2025 Latest Quarterly Report Analysis

Hey there, fellow Malaysian retail investors! Today, we’re diving deep into the latest financial performance of TECHNA-X BERHAD, as revealed in their unaudited quarterly report for the financial period ended 31 March 2025. This report offers a glimpse into the company’s journey, highlighting both progress and ongoing challenges. While the Group has shown an improved loss position, it continues to navigate a dynamic market environment and address legacy issues. Let’s break down the numbers and see what’s brewing!

Core Data Highlights: A Snapshot of Performance

TECHNA-X operates primarily in two key segments: Technology-driven Food & Beverage (F&B) and Technology & Digital Transformations Enabler. This quarter’s report provides insights into how these segments are contributing to the overall financial health of the Group.

Overall Financial Performance (Q3 FY2025 vs. Q3 FY2024)

For the third quarter ended 31 March 2025, TECHNA-X BERHAD reported a stable revenue performance and a notable improvement in its net loss position compared to the corresponding quarter of the previous year. This suggests effective cost management despite a slight dip in overall revenue.

The Group’s revenue remained relatively consistent at RM15.40 million in Q3 FY2025, a slight decrease from an estimated RM15.45 million in the corresponding quarter last year. This minor decline was largely influenced by the Ramadan fasting period in March, which impacted consumer spending in the F&B segment.

Despite the slight revenue dip, the Group managed its cost of sales effectively, leading to a gross profit of RM9.98 million. Operating expenses were well-controlled at RM10.88 million, remaining largely consistent with the previous year’s corresponding quarter.

Crucially, the Group reported a net loss attributable to equity holders of RM1.61 million for the quarter, a significant improvement from the RM2.4 million loss recorded in the corresponding quarter of the previous year. This narrowing of losses indicates positive strides in operational efficiency and cost management.

Segmental Performance and Financial Health

Let’s break down the performance by business unit:

• Technology driven Food and Beverage: This segment continues to be the primary revenue driver, contributing RM15.29 million. While this is a slight decrease from RM15.4 million in the corresponding quarter last year (due to Ramadan), it reflects a resilient core business. Compared to the preceding quarter (Q2 FY2025), revenue saw a marginal decrease from RM17.5 million, again primarily attributed to the Ramadan period. The segment recorded a loss before tax of RM0.67 million for the quarter.
• Technology and Digital Transformations Enabler: This segment saw growth, reporting revenue of RM0.11 million, an increase from RM0.05 million in the same quarter last year. This growth is largely underpinned by ongoing maintenance contracts that provide consistent recurring income. Compared to the preceding quarter, revenue also increased from RM0.08 million, driven by additional service requests. The segment recorded a loss before tax of RM0.41 million for the quarter.

Financial Position (as at 31 March 2025)

Looking at the balance sheet, TECHNA-X’s total assets stood at RM160.29 million, relatively stable compared to RM160.43 million as at 30 June 2024. Shareholders’ funds saw a slight decrease to RM53.70 million from RM54.15 million, resulting in a net assets per share of RM0.220 (down from RM0.230).

Cash and cash equivalents at the end of the period were RM1.48 million, a decrease from RM2.98 million as at 30 June 2024. The cash flow statement for the financial period ended 31 March 2025 (9 months) shows a net cash inflow from operating activities of RM2.04 million. However, significant cash was used in investing activities (RM7.16 million, primarily for acquisition of property, plant and equipment, and intangible assets) and financing activities (RM0.51 million), leading to an overall net decrease in cash and cash equivalents of RM5.63 million for the 9-month period.

Risks and Prospects: Navigating the Future

TECHNA-X is actively pursuing growth while managing existing challenges:

Current Year Prospects:

• Technology driven Food and Beverage: The Group, through Craveat International, continues to be a leading player in the F&B casual dining space with brands like TGI Fridays, The Tarik Place, and Italiannies. They have successfully re-imaged and re-opened TGIF outlets at Sunway Pyramid and a new outlet in Mid Valley Megamall. For The Tarik Place, the focus is on product development and creating new revenue streams from a central kitchen to supply semi-produce to other retail brands. This strategic expansion and operational optimization are key to future growth.

Key Risks and Challenges:

1. Qualified Audit Report: The auditors’ report on the audited financial statements for the period ended 30 June 2024 was qualified. This is a point that investors should note as it often indicates a material uncertainty or disagreement with management regarding the financial statements.
2. Market and Consumer Spending: The Group’s operations are subject to consumer spending preferences and general market conditions, particularly in the F&B and digital technology industries. Economic fluctuations or changes in consumer behavior could impact performance.
3. Litigation Matters:
   • Royal Malaysian Customs Department vs. Touchpoint International Sdn. Bhd.: A summary judgment was granted against Touchpoint (a subsidiary) for non-payment of service tax, totaling over RM0.6 million including penalty and interest. The company is taking steps to comply.
   • Saraleana Nattaya Binti Azmi vs. Techna-X Berhad: While the High Court initially ruled in favor of Techna-X in a claim for an outstanding balance of RM10.45 million related to a share acquisition, the vendor has filed a Notice of Appeal. This ongoing appeal introduces continued uncertainty.
   • Shah Alam High Court vs. Techna Analytics Sdn. Bhd.: A winding-up order was granted against Techna Analytics, an associate of the Company. While the financial impact is not explicitly detailed, it indicates a challenging environment for some of its associated entities.
4. Cash Flow and Liquidity: While operating activities generated cash, significant investing outflows led to a decrease in overall cash balances. Managing liquidity and funding future growth and operations will be crucial.

Strategies to Address Challenges:

• Cost Management: The improved net loss position for the quarter reflects the Group’s efforts in effective cost of sales management and controlling operating expenses.
• Recurring Income Streams: The digital transformation business benefits from ongoing maintenance contracts, providing a stable recurring income base.
• Corporate Proposals: The proposed private placement, expected to raise approximately RM1.64 million, aims to strengthen the company’s working capital and facilitate repayment of trade payables. This initiative is vital for improving the company’s financial flexibility.

What are your thoughts on TECHNA-X’s latest performance? Do you believe their F&B expansion and digital strategies are enough to propel them towards profitability amidst the current challenges? Share your insights in the comments below!