Greetings, fellow investors and market watchers!
TAGHILL HOLDINGS BERHAD, formerly known as Siab Holdings Berhad, has just unveiled its latest interim financial report for the quarter ended 31 March 2025. This report provides a fascinating glimpse into a company undergoing significant transformation. While we see robust revenue figures, largely propelled by strategic acquisitions, the underlying operational challenges from existing segments present a complex picture. Let’s dive deep into the numbers and understand what this means for the company’s journey ahead.
The headline figures show a substantial increase in revenue for the cumulative 15-month period, reaching RM675.85 million. However, the current quarter saw the Group record a loss after tax of RM44.33 million. This contrast highlights the dual narrative of growth through acquisition alongside ongoing operational hurdles. The recent acquisition of Taghill Projects Sdn Bhd plays a pivotal role in these results, contributing significantly to the Group’s top line and gross profit.
Decoding the Financial Performance
Understanding TAGHILL’s latest performance requires a look at both the current quarter and the cumulative period, especially in comparison to the immediate preceding quarter, as year-on-year comparative figures are not available due to a change in the financial year-end.
Quarterly Performance: Q1 2025 vs. Q4 2024
Let’s compare the performance of the current quarter (31 March 2025) with the immediate preceding quarter (31 December 2024) to get a clearer picture of recent trends:
Current Quarter (31 March 2025)
Revenue: RM185.67 million
Gross Profit: RM17.33 million
Profit/(Loss) Before Tax: RM(39.58) million
Profit/(Loss) After Tax: RM(44.33) million
Immediate Preceding Quarter (31 December 2024)
Revenue: RM235.76 million
Gross Profit: RM8.33 million
Profit/(Loss) Before Tax: RM4.47 million
Profit/(Loss) After Tax: RM2.45 million
While revenue saw a decrease of RM50.09 million in the current quarter, primarily due to lower construction activities, it’s interesting to note that Gross Profit actually increased by RM9.00 million. This suggests an improvement in the profitability of projects undertaken. However, this gain was significantly overshadowed, as the Group swung from a profit before tax of RM4.47 million in the preceding quarter to a substantial loss before tax of RM39.58 million in the current quarter. This significant shift into loss was mainly driven by operational losses, as well as impairments on trade receivables and contract assets from various construction projects under Siab (M) Sdn Bhd and Siab Construction Sdn Bhd (“Siab”).
Cumulative Performance: 15-Months Ended 31 March 2025
For the 15-month period ended 31 March 2025, the Group reported a revenue of RM675.85 million and a Gross Profit of RM37.38 million. Despite these significant top-line figures, the Group recorded an overall loss after tax of RM40.25 million for this cumulative period. Basic and diluted loss per share stood at 0.03 sen for both the current quarter and the cumulative period.
A Tale of Two Segments: Taghill Projects vs. Siab
The report clearly delineates the performance contributions from different parts of the Group. The recent acquisition of Taghill Projects has been a significant positive, contributing substantially to the Group’s revenue and Gross Profit. Taghill Projects reported an impressive average Gross Profit margin of approximately 11.6% and a Profit After Tax of RM4.60 million in the current quarter, and RM13.20 million for the financial year-to-date.
However, this positive contribution was unfortunately offset by operational losses from the existing Siab projects. These losses are attributed to several factors:
- Impairment on trade receivables amounting to RM14.86 million for the financial year-to-date.
- Impairment on contract assets totaling RM12.20 million for the financial year-to-date.
- Operational losses stemming from ongoing projects, largely due to elevated construction material costs and high defect and rectification costs incurred for completed projects.
Financial Health: Balance Sheet Snapshot
As at 31 March 2025, the Group’s financial position reflects the impact of its strategic acquisitions and ongoing operations:
| Item | As at 31 March 2025 (RM’000) | As at 31 December 2023 (RM’000) |
|---|---|---|
| Total Assets | 711,239 | 160,320 |
| Total Equity | 119,645 | 43,489 |
| Total Liabilities | 591,594 | 116,831 |
| Net Assets Per Share (RM) | 0.08 | 0.07 |
The substantial increase in total assets, particularly non-current assets (Property, Plant and Equipment, Goodwill) and current assets (Trade and other receivables, Contract assets), is a direct result of the Taghill Projects acquisition. Correspondingly, total liabilities have also seen a significant rise, notably in trade and other payables and loans and borrowings, reflecting the financing aspects of these expansions. Despite the increase in liabilities, the net assets per share saw a slight uptick from RM0.07 to RM0.08, indicating a marginal improvement in shareholder value per share.
Cash Flow Dynamics
For the 15-month period ended 31 March 2025, the Group generated RM13.58 million from operating activities, which is a positive sign of core business cash generation. However, investing activities consumed a significant RM69.93 million, primarily due to the acquisition of subsidiaries. Financing activities also saw a net outflow of RM12.72 million. This resulted in an overall net decrease in cash and cash equivalents of RM69.08 million, leading to a negative cash and cash equivalents balance of RM(62.03) million at the end of the period, largely due to increased bank overdrafts.
Risks, Strategies, and the Road Ahead
The Malaysian construction sector shows promising signs, with the Department of Statistics Malaysia reporting a 16.6% increase in the value of work done in Q1 2025. This growth is buoyed by expansion in special trade activities, residential buildings, and non-residential buildings. The residential buildings sub-sector, in particular, is expected to remain resilient, supported by affordable housing initiatives under the Ekonomi MADANI framework and continued private sector participation.
However, the industry is not without its challenges. TAGHILL acknowledges several headwinds that could impact operating expenses:
- Rising Costs: The increase in the national minimum wage from RM1,500 to RM1,700, effective 1 February 2025, will exert additional cost pressures on this labor-intensive sector.
- Fuel and Logistics Costs: The removal of diesel subsidies and the imposition of service tax on logistics services are likely to further elevate raw material costs.
In response to these dynamics, TAGHILL is actively pursuing several strategic initiatives:
- Strong Order Book: As of 31 March 2025, the Group boasts a robust order book of RM1.946 billion, providing a strong pipeline of ongoing and upcoming projects.
- Diversification into Property Development: A significant move announced on 8 April 2025 is the Proposed Joint Venture with YTB Impression Sdn Bhd and a corresponding diversification into property development. This strategic shift is expected to generate multiple revenue streams and strengthen TAGHILL’s market presence in Malaysia’s growing real estate sector.
- Operational Focus: Management remains committed to improving project delivery, enhancing operational efficiency, and resolving the operational issues faced by the Siab projects. The positive contributions from Taghill Projects are expected to continue supporting the Group’s financial recovery.
- Cash Flow Management: The Group will continue its efforts to conserve cash flow and ensure continuous profitable operations.
The Board remains optimistic about the Group’s long-term prospects, underpinned by the resilience of the Malaysian construction and property markets.
Summary and Outlook
TAGHILL HOLDINGS BERHAD’s latest quarterly report presents a nuanced financial narrative. On one hand, the strategic acquisition of Taghill Projects has significantly boosted the Group’s revenue and gross profit, demonstrating the potential of its expanded business scope. On the other hand, legacy operational issues and impairments within the existing Siab segments have led to a net loss for the quarter and cumulative period. This highlights the challenges of integrating new businesses while simultaneously addressing existing operational inefficiencies and market cost pressures.
Looking ahead, the Group’s strong order book and the strategic diversification into property development through the proposed joint venture are positive steps that could unlock new growth avenues and stabilize future earnings. The management’s focus on operational efficiency and resolving existing project issues will be crucial for sustained recovery.
However, investors should remain mindful of the prevailing economic headwinds and the company’s ability to navigate them effectively.
- Rising Operational Costs: The increasing cost of raw materials, labor (due to minimum wage hikes), and logistics (due to subsidy removal and service tax) will continue to put pressure on profit margins.
- Legacy Project Challenges: The ongoing operational losses and impairments from Siab’s projects need to be effectively managed and resolved to prevent further drag on overall profitability.
- Cash Flow Management: While operating cash flow is positive, the overall cash position is impacted by significant investing activities and bank overdrafts, which warrant close monitoring.
TAGHILL’s journey is clearly one of transition and strategic realignment. The integration of Taghill Projects and the foray into property development signal a new chapter, but the successful resolution of existing challenges will be key to realizing its full potential.
What are your thoughts on TAGHILL’s latest report? Do you believe the diversification into property development will be the turning point for the company, or do the existing operational challenges pose a significant hurdle? Share your views in the comments below!
