Systech BHD’s Latest Financials: Revenue Soars, But Profitability Challenges Persist
Systech BHD (Company No. 201001012883(897114-T)) has just unveiled its unaudited financial results for the quarter ended 31 March 2025. This report paints a complex picture: while the company achieved impressive revenue growth, it continues to grapple with significant losses. For Malaysian retail investors, understanding the nuances behind these figures is crucial. Let’s dive into the core highlights and what they mean for Systech’s journey.
The headline numbers show a remarkable 71% increase in quarterly revenue and a staggering 153% surge in full-year revenue. However, this growth was overshadowed by a deepening loss before tax in the current quarter.
Core Financial Highlights: A Tale of Growth and Losses
Quarterly Performance: Revenue Up, Losses Widen
Looking at the current quarter (31 March 2025) compared to the same period last year (31 March 2024), Systech BHD demonstrated strong top-line expansion, primarily driven by its Corporate Solutions segment. However, operational challenges led to a significant increase in losses.
Current Quarter (31.03.2025)
Revenue: RM12,373,000
Gross Profit: RM1,034,000
Loss Before Tax: RM(6,524,000)
Loss After Tax: RM(8,847,000)
Basic Loss Per Share (Continuing): (1.29) sen
Previous Corresponding Quarter (31.03.2024)
Revenue: RM7,229,000
Gross Profit: RM3,411,000
Loss Before Tax: RM(3,764,000)
Loss After Tax: RM(4,179,000)
Basic Loss Per Share (Continuing): (1.08) sen
Revenue for the quarter surged by RM5.144 million, or 71%, reaching RM12.373 million. This indicates robust sales activity. However, gross profit experienced a sharp decline of 70%, falling to RM1.034 million. The loss before tax widened by 73% to RM(6.524) million, primarily attributed to increased staff costs and a significant impairment of goodwill.
Year-to-Date Performance: Strong Revenue Growth, but Losses Persist
For the full financial year ended 31 March 2025, Systech’s revenue growth was even more pronounced, showcasing the company’s expanding market reach, though profitability remained a challenge.
Current Year-to-Date (31.03.2025)
Revenue: RM63,586,000
Gross Profit: RM13,815,000
Loss Before Tax: RM(5,670,000)
Loss After Tax: RM(7,993,000)
Basic Loss Per Share (Continuing): (1.17) sen
Previous Year-to-Date (31.03.2024)
Revenue: RM25,131,000
Gross Profit: RM10,627,000
Loss Before Tax: RM(4,784,000)
Loss After Tax: RM(5,510,000)
Basic Loss Per Share (Continuing): (1.58) sen
Full-year revenue soared by 153% to RM63.586 million, a testament to the company’s growth strategies. Gross profit also saw a healthy 30% increase to RM13.815 million. While the loss before tax increased by 19% to RM(5.670) million, it’s worth noting that the basic loss per share from continuing operations actually improved from (1.58) sen to (1.17) sen, indicating a relative improvement in per-share profitability despite the overall loss.
Quarter-on-Quarter Comparison: A Dip in Performance
Comparing the current quarter (31 March 2025) with the immediate preceding quarter (31 December 2024), Systech experienced a sequential downturn in both revenue and profitability.
Current Quarter (31.03.2025)
Revenue: RM12,373,000
Gross Profit: RM1,034,000
Loss Before Tax: RM(6,524,000)
Immediate Preceding Quarter (31.12.2024)
Revenue: RM23,998,000
Gross Profit: RM6,451,000
Profit Before Tax: RM1,165,000
Revenue decreased by 48% quarter-on-quarter, reaching RM12.373 million, with all segments contributing to this decline. The most significant shift was from a profit before tax of RM1.165 million in the preceding quarter to a loss before tax of RM(6.524) million in the current quarter, primarily due to the goodwill impairment and the overall revenue decrease.
Segmental and Geographical Breakdown
Systech’s revenue is primarily driven by its Corporate Solutions segment, which focuses on Digital Transformation, AI, ERP, IoT, and Human Capital Management (HCM) solutions. The company’s operations are largely concentrated in Malaysia.
| Business Segment (FYE 31 March 2025) | Revenue (RM’000) | Segment Results (RM’000) |
|---|---|---|
| Corporate Solutions | 45,464 | (6,133) |
| CyberSecurity Solutions | 11,666 | (2,913) |
| e-Logistics | 10,076 | 1,261 |
| Adjustments and Eliminations | (3,620) | 2,608 |
| Consolidated Total | 63,586 | (5,177) |
| Geographical Segment (FYE 31 March 2025) | Revenue from External Customers (RM’000) |
|---|---|
| Malaysia | 52,797 |
| North Asia and Other Areas | 10,509 |
| South East Asia | 280 |
| Total | 63,586 |
The Corporate Solutions segment is the largest revenue contributor, but all segments contributed to the overall loss from operations. Geographically, Malaysia remains the primary revenue driver.
Financial Health and Cash Flow
Systech’s balance sheet has expanded significantly, with total assets nearly doubling from RM40.283 million to RM90.324 million. This increase is largely due to strategic acquisitions and share issuances. Total equity also saw a substantial rise to RM50.941 million, boosting net assets per share to 7.48 sen from 4.39 sen. However, borrowings have also increased considerably, with a gearing ratio of 0.27 times for secured borrowings.
The cash flow statement reveals a shift from positive to negative net cash flow from operating activities, now at RM(26.812) million, indicating increased working capital needs or less efficient operations. Investing activities also show a higher outflow, reflecting the company’s acquisition strategy. Crucially, a significant inflow from financing activities, primarily from a share issuance of RM51.282 million, helped to bolster the cash position, though cash and cash equivalents at the end of the year decreased to RM2.951 million.
Risks and Prospects: Navigating Growth and Challenges
Systech BHD is clearly on an aggressive growth trajectory, particularly within its Corporate Solutions segment, which includes Digital Transformation, AI, ERP, IoT, and HCM solutions, as well as cybersecurity. The acquisition of Wilstech is a strategic move designed to enhance capabilities and broaden the portfolio, bringing valuable resources and expertise to the Group. The company is actively pursuing further strategic mergers and acquisitions to capitalize on new opportunities in AI and IoT solutions.
While the company notes that foreign currency exposures are managed closely and have no material impact on financial results, the significant goodwill impairment and increased staff costs highlight operational challenges that need continuous monitoring. The shift to negative cash flow from operations also warrants attention, as sustainable long-term growth typically relies on strong operational cash generation.
The company’s recent private placement, which successfully listed its first tranche of shares, indicates a proactive approach to strengthening its financial position and funding its expansion plans. This capital injection is crucial for supporting its ambitious growth and acquisition strategies.
Summary and
Systech BHD’s latest report presents a mixed but dynamic picture. The company has demonstrated exceptional revenue growth, particularly on a full-year basis, driven by its strategic focus on high-growth technology solutions and recent acquisitions. This top-line expansion and strategic positioning in key tech sectors like AI, IoT, and cybersecurity are certainly positive indicators of its future potential.
However, the widening losses in the current quarter, primarily due to goodwill impairment and increased staff costs, signal ongoing challenges in translating revenue growth into profitability. The substantial increase in borrowings and the shift to negative operational cash flow also suggest that the company’s aggressive expansion comes with financial demands that need careful management.
Key points to consider from this report:
- Robust Revenue Growth: The significant increase in both quarterly and full-year revenue demonstrates the company’s expanding market presence and successful strategic initiatives in Corporate Solutions.
- Profitability Challenges: Despite revenue growth, the company recorded widening losses in the current quarter, driven by factors like goodwill impairment and increased staff costs.
- Strategic Acquisitions and Capital Raising: The acquisition of Wilstech and the ongoing private placement underscore Systech’s commitment to enhancing capabilities and funding future growth, positioning it for potential long-term expansion.
- Operational Cash Flow Shift: The move from positive to negative net cash flow from operating activities highlights increased working capital needs and an area for operational efficiency improvement.
Overall, Systech BHD is clearly a company in a phase of significant transformation and expansion. Its strategic focus on cutting-edge technologies and willingness to pursue growth through acquisitions are notable. The challenge ahead will be to convert this impressive top-line growth into sustainable profitability and positive operational cash flows.
What are your thoughts on Systech BHD’s latest performance? Do you think the company can successfully navigate its current profitability challenges while maintaining its growth momentum in the dynamic technology sector? Share your insights in the comments below!
