ZEN TECH INTERNATIONAL BERHAD (Registration No.: 200401027289(665797-D)) has just released its unaudited condensed consolidated financial statements for the period ended 31 March 2025. This latest report presents a mixed bag of results, highlighting the company’s continued efforts to grow its top line while navigating significant operational challenges that have impacted its profitability.
While the company saw a commendable increase in revenue for both the quarter and the cumulative nine-month period, it unfortunately recorded a deepening of losses. This detailed analysis will help Malaysian retail investors understand the key figures, the performance of its various business units, its financial health, and the outlook moving forward.
Core Financial Highlights: Revenue Up, But Losses Deepen
ZEN TECH INTERNATIONAL BERHAD has shown resilience in revenue generation, but the operational landscape has proven challenging, leading to increased losses. Let’s dive into the core numbers for both the individual quarter and the cumulative nine-month period.
Individual Quarter Performance (3 months ended 31 March)
31 March 2025
Revenue: RM13.68 million
Loss from Operations: (RM2.29 million)
Loss before Taxation: (RM2.36 million)
Loss for the Period after Tax: (RM2.41 million)
Basic Loss per Share: (0.06 sen)
31 March 2024
Revenue: RM12.49 million
Loss from Operations: (RM0.74 million)
Loss before Taxation: (RM0.82 million)
Loss for the Period after Tax: (RM0.90 million)
Basic Loss per Share: (0.03 sen)
For the three months ended 31 March 2025, the company recorded a 9.54% increase in revenue to RM13.68 million, up from RM12.49 million in the same period last year. However, this growth was overshadowed by a significant surge in losses. Loss from operations widened by 209.04% to (RM2.29 million), and the loss after tax expanded by 169.50% to (RM2.41 million). Consequently, basic loss per share doubled from (0.03 sen) to (0.06 sen).
Cumulative Quarter Performance (9 months ended 31 March)
31 March 2025
Revenue: RM41.73 million
Loss from Operations: (RM4.90 million)
Loss before Taxation: (RM5.06 million)
Loss for the Period after Tax: (RM5.26 million)
Basic Loss per Share: (0.12 sen)
31 March 2024
Revenue: RM33.13 million
Loss from Operations: (RM2.68 million)
Loss before Taxation: (RM2.91 million)
Loss for the Period after Tax: (RM3.14 million)
Basic Loss per Share: (0.10 sen)
Looking at the cumulative nine-month period, revenue grew by 26% to RM41.73 million from RM33.13 million in the previous year. Despite this strong top-line growth, the cumulative loss from operations increased by 83% to (RM4.90 million), and the loss after tax rose by 68% to (RM5.26 million). This indicates that while sales are increasing, the cost of generating that revenue and managing operations has outpaced the growth, leading to wider losses.
Business Unit Performance: A Closer Look
ZEN TECH INTERNATIONAL BERHAD operates primarily across three segments: Glove Manufacturing, Software & Books, and Investment Holdings. The latest report sheds light on the individual contributions and challenges faced by each.
- Glove Manufacturing: This segment remains the primary revenue driver, contributing RM13.54 million in revenue for the quarter (up from RM12.16 million last year). However, it was also the main contributor to the group’s losses, recording a loss of (RM1.63 million) for the quarter, significantly higher than the (RM0.16 million) loss in the same period last year. The report attributes this to an increase in foreign exchange rates and the cost of raw materials.
- Software & Books: This segment saw a decline in revenue to RM0.14 million (from RM0.33 million last year) and shifted from a profit of RM0.40 million last year to a loss of (RM0.09 million) this quarter. This suggests a challenging period for this business unit.
- Investment Holdings: This segment recorded a loss of (RM0.58 million), an improvement compared to the (RM0.98 million) loss in the corresponding quarter last year. While still in the red, the reduced loss is a positive sign for this segment.
Financial Health and Cash Flow
As at 31 March 2025, ZEN TECH INTERNATIONAL BERHAD’s financial position shows some shifts compared to 30 June 2024 (the previous financial year-end).
Total assets increased slightly to RM75.06 million from RM74.68 million. However, total equity attributable to owners of the company decreased to RM62.40 million from RM65.96 million, mainly due to the accumulated losses. Total liabilities increased to RM23.49 million from RM18.12 million, largely driven by an increase in trade payables and other payables.
In terms of cash flow, a notable improvement was seen in operating activities. For the nine months ended 31 March 2025, the company generated RM2.36 million in net cash from operating activities, a significant turnaround from the (RM3.24 million) cash used in operations in the previous financial year (ended 30 June 2024). This suggests better management of day-to-day operations despite the reported losses. However, investing activities continued to be a net cash outflow, primarily due to the purchase of property, plant, and equipment.
Risks and Prospects: Navigating the Headwinds
The company acknowledges the challenges it faces, particularly within the glove manufacturing segment. The increase in foreign exchange rates and raw material costs has been a significant factor contributing to the segment’s losses. However, management expresses optimism regarding the future of the glove business.
The company is expecting an upward trend in the glove business as the average selling price is increasing during the forthcoming financial period, and the cost of raw materials is stabilizing. This outlook suggests that ZEN TECH is banking on market improvements and cost stability to turn around its core business segment.
Beyond operational challenges, the company is also involved in material litigation. Two significant cases are ongoing:
- A defamation suit filed by a former Non-Independent and Non-Executive Director, which has been postponed for trial to November 2026.
- Legal proceedings initiated by the company against two individuals concerning a Memorandum of Understanding related to a share acquisition, dated April 2025.
These legal matters represent potential financial and reputational risks that the company will need to navigate carefully in the coming periods.
Summary and Outlook
ZEN TECH INTERNATIONAL BERHAD’s latest quarterly report paints a picture of a company actively pursuing revenue growth, as evidenced by the increase in its top line. However, this growth has come at the cost of deepening losses, primarily driven by the challenges in its core glove manufacturing business due to rising input costs and adverse foreign exchange movements. The positive shift in operating cash flow is a commendable development, indicating improved operational efficiency in managing cash, even amidst profitability challenges.
The company’s prospects hinge significantly on the anticipated stabilization of raw material costs and an increase in the average selling price for gloves. If these market conditions materialize as expected, it could provide the much-needed tailwind for the glove manufacturing segment to return to profitability. However, the ongoing legal disputes add a layer of uncertainty and potential financial strain that warrants close monitoring.
Key risk points to watch for include:
- Continued volatility in foreign exchange rates and raw material prices impacting the glove manufacturing segment’s profitability.
- The outcome and potential financial implications of the ongoing material litigation cases.
- The ability of the Software & Books segment to reverse its recent decline in revenue and return to profitability.
As ZEN TECH INTERNATIONAL BERHAD continues to navigate these complex market dynamics, its ability to execute its strategies, particularly in cost management and leveraging improving market conditions for gloves, will be crucial. The journey ahead appears to be one of cautious optimism mixed with significant challenges.
What are your thoughts on ZEN TECH INTERNATIONAL BERHAD’s latest performance? Do you believe the company can successfully leverage the expected improvements in the glove market to turn its fortunes around, or will the rising costs and legal battles continue to weigh on its profitability? Share your views in the comment section below!
