Benalec Holdings Berhad: Navigating Challenges with a Strategic Pivot in Q1 FY2025
Benalec Holdings Berhad, a familiar name in Malaysia’s marine construction and land reclamation sector, has just released its unaudited interim financial report for the first quarter ended 31 March 2025. This report offers a glimpse into the company’s performance, highlighting its resilience and strategic adjustments in a dynamic market. While revenue saw a notable decline, the company successfully pivoted from a loss to a profit before tax, signaling effective cost management and strategic focus. Let’s dive into the numbers and uncover what this report means for the company’s journey ahead.
Q1 FY2025 Financial Performance: A Turnaround Story
The first quarter of the financial year 2025 presented a mixed bag for Benalec, with a significant shift in its profitability despite a drop in top-line revenue. This turnaround is primarily attributed to a substantial reduction in administrative and other expenses, alongside a positive swing in unrealised foreign exchange gains.
Current Quarter (Q1 FY2025)
Revenue: RM 14,612,000
Profit Before Tax (PBT): RM 2,193,000
Profit Attributable to Owners of Parent: RM 2,365,000
Basic Earnings Per Share (EPS): 0.23 sen
Preceding Year Quarter (Q1 FY2024)
Revenue: RM 37,381,000
Loss Before Tax (LBT): RM (863,000)
Loss Attributable to Owners of Parent: RM (453,000)
Basic Loss Per Share (LPS): (0.04) sen
Revenue Decline: Revenue for Q1 FY2025 stood at RM 14.61 million, a significant 60.91% decrease compared to RM 37.38 million in the same period last year. This reduction was primarily due to lower land and infrastructure disposal recognition, which saw a drop from RM 17.63 million in Q1 FY2024 to just RM 0.18 million in the current quarter.
Profitability Turnaround: Despite the revenue dip, Benalec successfully swung from a loss before tax of RM 0.86 million in Q1 FY2024 to a profit before tax of RM 2.19 million in Q1 FY2025. This impressive 354.11% improvement was largely driven by a substantial RM 6.71 million decrease in administrative and other expenses, coupled with a positive swing of RM 2.75 million in unrealised foreign exchange gains.
Segmental Performance: Marine Construction Leads
Breaking down the revenue by business segments, Marine Construction, particularly “Land Reclamation” activities, remains the primary contributor. For the quarter, the “Land” segment (which includes land reclamation and disposal) generated RM 14.43 million in external sales, while “Vessel Chartering” contributed RM 0.18 million. The company’s strategic focus appears to be on optimising its core land-related operations and managing costs across all units.
Financial Health: A Stable Position
As of 31 March 2025, Benalec’s financial position remains relatively stable. Total assets were recorded at RM 616.70 million, a slight decrease from RM 618.65 million at the end of December 2024. Total equity attributable to owners of the parent saw a modest increase to RM 374.60 million from RM 372.66 million. The company’s net assets per share remained consistent at RM 0.36.
Cash flow from operations saw a significant reduction, generating RM 3.45 million compared to RM 49.09 million in the same quarter last year. However, net cash used in investing activities was also much lower at RM 0.15 million (vs RM 29.98 million used last year), and net cash used in financing activities decreased to RM 1.95 million (vs RM 16.20 million used last year), indicating better management of outflows in these areas.
Risks and Prospects: Charting a Cautious Yet Optimistic Path
Benalec’s Board and Management acknowledge the prevailing economic and operating challenges but maintain a cautiously optimistic outlook. Their strategy is centered on a more conservative approach, focusing on key areas to ensure sustainability and future growth:
- Monetizing Existing Inventory: The priority is to market and sell existing “Inventory – Land Held For Sale.”
- Completing Current Order Book: Ensuring the completion of current projects where settlements are in cash.
- “Sell-Then-Build” Strategy: Adopting this approach for the remaining unreclaimed land, especially where settlements are in-kind.
The company has approximately RM 57.85 million in near-term revenue yet to be recognized from secured land reclamation contracts (RM 32.70 million) and signed Sale & Purchase Agreements (RM 25.15 million). This provides a clear revenue pipeline. Furthermore, Benalec possesses substantial land banks in Melaka (37.06 acres) and Pulau Indah, Port Klang (41.71 acres), which are already reclaimed and ready for immediate sale. The management is actively pursuing sales and marketing efforts for these assets.
Despite the broader industry slowdown, the Group remains confident in the strong fundamentals of its two flagship projects in Johor: the Tanjung Piai Maritime Industrial Park (TPMIP) and the Pengerang Maritime Industrial Park (PMIP). These industrial parks are strategically located to capture value-added activities within the oil & gas and renewable energy sectors. Management is actively engaged in financial negotiations with prospective off-takers, due diligence processes with buyers, and project feasibility studies with potential partners.
Benalec acknowledges the need to adjust its operational pace to navigate current uncertainties, emphasizing vigilance, innovation, and adaptation to market needs to create value for its customers.
Summary and
Benalec Holdings Berhad’s Q1 FY2025 report showcases a company actively adapting to a challenging environment. While revenue declined, the significant turnaround in profitability from a loss to a profit before tax is a positive highlight, driven by effective cost management and favorable forex movements. The company’s conservative yet strategic approach, focusing on monetizing existing land assets and securing future cash-based projects, indicates a pragmatic path forward. The substantial land bank and strategically positioned flagship projects in Johor provide a solid foundation for future growth, even as the broader industry faces headwinds.
Key points from this report include:
- A notable shift from a pre-tax loss to a pre-tax profit, primarily due to disciplined cost control and positive unrealised foreign exchange gains.
- A strategic focus on monetizing existing “Inventory – Land Held For Sale” and adopting a “sell-then-build” model for future developments.
- A clear pipeline of approximately RM 57.85 million in future revenue from existing contracts and signed agreements.
- Possession of significant reclaimed land banks in Melaka and Pulau Indah ready for immediate sale.
- Confidence in the long-term potential of its flagship industrial parks in Johor, strategically positioned for key growth sectors.
Investors should continue to monitor how effectively Benalec executes its strategies, especially in monetizing its land bank and securing new projects in a competitive market. The focus on cash-based settlements and prudent financial management will be key indicators of its ability to sustain this positive momentum.
What are your thoughts on Benalec’s strategic shift and its Q1 FY2025 performance? Do you believe their focus on monetizing existing assets and securing cash-based projects will be sufficient to navigate the current market challenges? Share your insights in the comments below!
