GDEX’s Q1 2025: A Return to Profitability Amidst Shifting Business Dynamics
Greetings, fellow investors! Today, we’re diving into the latest financial report from GDEX Berhad for the first quarter ended 31st March 2025. As a prominent player in Malaysia’s logistics and express delivery sector, GDEX’s performance often provides valuable insights into the broader economic landscape. This quarter’s report reveals a significant turnaround, marking a return to profitability and highlighting the strategic importance of its evolving business segments.
The headline figures are certainly eye-catching: GDEX has successfully transitioned from a loss-making position to a profitable one, driven by robust growth in its Information Technology (IT) segment and effective cost management. Let’s break down the numbers and see what’s truly driving this change.
Q1 2025 Financial Highlights: A Positive Turn
GDEX has delivered a commendable performance in the first quarter of 2025, demonstrating resilience and strategic agility. The group’s revenue saw a healthy increase, and crucially, it moved back into the black after facing losses in the same period last year.
Q1 2025
Revenue: RM105.5 million
Profit Before Tax: RM0.8 million
Net Profit for the Period: RM0.06 million
Basic Loss Per Share: (0.003) sen
Q1 2024
Revenue: RM99.4 million
Loss Before Tax: RM(2.2) million
Net Loss for the Period: RM(2.5) million
Basic Loss Per Share: (0.04) sen
Overall, group revenue for the current quarter increased by 6.1% to RM105.5 million. This growth, combined with effective cost management, particularly in express delivery services, propelled the company to a profit before tax of RM0.8 million, a significant improvement of 137.4% compared to the RM2.2 million loss in the corresponding quarter last year. The net profit for the period stood at RM0.06 million, a welcome shift from the RM2.5 million loss previously. While basic loss per share remains negative at (0.003) sen, it’s a substantial reduction from (0.04) sen, indicating the company is nearing break-even on a per-share basis.
Diving Deeper: Segmental Performance
Understanding the contribution of each business segment is key to grasping GDEX’s overall performance. This quarter saw a clear shift in dynamics:
Express Delivery
The express delivery segment reported a revenue of RM85.7 million, showing only marginal changes compared to the same period last year. However, its profit before tax soared by an impressive 312.4% to RM2.7 million. This remarkable improvement was primarily attributed to a reduction in warehouse costs following the departure of a major customer, highlighting the impact of operational efficiencies.
Logistics
Conversely, the logistics segment faced headwinds, with revenue declining by 14.8% to RM3.0 million. This was mainly due to the cessation of business activities by a major customer. Consequently, the segment’s loss before tax widened by 7.6% to RM3.0 million, reflecting the challenges posed by customer churn.
Information Technology (IT)
The star performer this quarter is undoubtedly the Information Technology segment. Its revenue surged by a substantial 76.8% to RM16.6 million. This significant growth was largely contributed by a subsidiary group acquired on 1st July 2024. As a result of this sales revenue growth, the IT segment’s profit before tax improved by an astounding 170.9% to RM1.3 million.
Other Segments
The ‘Others’ segment, which includes dormant companies, property management, and insurance agent activities, continued to incur losses before tax, mainly due to property maintenance costs and the discontinuation of rental activities.
Financial Health at a Glance
Looking at the balance sheet as at 31st March 2025, GDEX’s total assets stood at RM600.0 million, a slight decrease from RM601.8 million at the end of 2024. Total equity also saw a minor dip to RM429.7 million from RM430.1 million. Total liabilities decreased slightly to RM170.3 million from RM171.7 million, indicating some deleveraging. The net assets per share attributable to owners of the company remained stable at RM0.08.
In terms of cash flow, the group reported net cash used in operating activities of RM3.5 million. However, net cash generated from investing activities was a healthy RM5.4 million, primarily due to a decrease in fixed deposits pledged with licensed banks. Net cash used in financing activities amounted to RM7.0 million, leading to a net decrease in cash and cash equivalents by RM5.0 million for the period, ending the quarter with RM84.4 million in cash and cash equivalents.
It’s also worth noting that the group’s total borrowings have decreased to RM4.3 million as at 31st March 2025, from RM5.2 million in the same period last year, which is a positive sign for financial stability.
Risks and Future Prospects
GDEX’s management has highlighted a challenging operating environment, which is a reality for many businesses. The report points to specific challenges like the cessation of business from a major customer in the logistics segment and losses incurred by the Vietnam subsidiary. Additionally, delays in project awards within the IT segment, when compared to the immediate preceding quarter, suggest that even high-growth areas can face short-term hurdles.
However, the company remains optimistic about its future. Their continued focus on technology and cost optimisation is clearly paying off, as evidenced by the resilient results. The strong performance of the IT segment underscores the success of strategic investments and digital transformation initiatives.
Looking ahead, GDEX aims to expand its ecosystem by forming new partnerships with global leading technology leaders. They are also actively exploring acquisitions of complementary IT service providers. These strategic moves are designed to reinforce GDEX’s position as an integrated, technology-centric logistics player, which could be a significant differentiator in a competitive market.
Furthermore, the Directors of the Company have proposed a final single-tier dividend of 0.2 sen per share for the financial year ended 31st December 2024, amounting to approximately RM11.3 million. This proposal, subject to shareholder approval at the upcoming Annual General Meeting, reflects the company’s commitment to returning value to its shareholders.
Summary and Outlook
GDEX’s Q1 2025 report paints a picture of a company navigating a dynamic market with strategic intent. The return to profitability is a significant achievement, largely driven by the strong performance of its IT segment and effective cost management in its core express delivery business. While the logistics segment faces challenges, the overall strategic direction towards becoming a technology-centric logistics provider appears to be gaining traction.
Key takeaways from this report include:
- Profit Turnaround: A commendable shift from a loss to a profit, demonstrating improved operational efficiency.
- IT Segment as a Growth Driver: The significant revenue and profit growth in the IT segment highlights its increasing importance to the group’s overall performance and future strategy.
- Cost Management: Successful cost reductions in express delivery contributed positively to profitability, even with marginal revenue changes in that segment.
- Strategic Expansion: The company’s plans for new partnerships and acquisitions in the IT space signal a clear path for future growth and diversification.
- Shareholder Return: The proposed dividend for the previous financial year indicates a commitment to shareholder value.
The path forward will involve continued execution of their digital transformation initiatives and successful integration of new partnerships or acquisitions. The ability to mitigate challenges in the logistics segment and maintain momentum in the IT sector will be crucial for sustained positive growth.
What are your thoughts on GDEX’s Q1 2025 performance? Do you believe their focus on technology and strategic acquisitions will be enough to propel them to sustained growth in the coming years? Share your insights in the comments below!
