JCBNEXT BERHAD’s Q1 2025 Performance: Revenue Soars, But Profitability Takes a Hit – What’s Driving the Numbers?
Hello fellow investors and market watchers! Today, we’re diving deep into the latest financial report from JCBNEXT BERHAD for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into the company’s performance, revealing a significant surge in revenue but also a notable dip in overall profitability. What’s behind these contrasting figures? Let’s break it down and uncover the key takeaways that every Malaysian retail investor should know.
While the top line shows impressive growth, indicating strength in certain areas, the bottom line tells a more nuanced story influenced by various factors, including investment gains and foreign exchange movements. Join me as we dissect the numbers and understand what this means for JCBNEXT’s journey ahead.
Core Data Highlights: A Closer Look at the Numbers
Revenue Growth: A Bright Spot
JCBNEXT BERHAD kicked off Q1 2025 with a robust performance in revenue, primarily driven by its Investment Holding segment. The company’s consolidated revenue saw a substantial increase, largely due to higher dividend income from its quoted investments.
Q1 2025 Revenue
RM2.46 million
Q1 2024 Revenue
RM1.56 million
This represents a remarkable 57.5% increase in revenue compared to the same period last year. It’s clear that the company’s investment portfolio is generating significant income.
Profitability: A Mixed Picture
Despite the strong revenue growth, JCBNEXT’s profitability saw a decline. The Profit Before Tax (PBT) for Q1 2025 decreased significantly compared to the corresponding quarter in the previous year. Let’s examine the key figures:
Q1 2025 Profit Before Tax (PBT)
RM7.71 million
Q1 2024 Profit Before Tax (PBT)
RM11.86 million
This translates to a 34.9% decrease in PBT year-over-year. So, what contributed to this decline?
Key Factors Impacting Profitability:
- Lower Gains on Disposal of Associate Shares: The company recorded lower gains from the disposal of shares in its associate, 104 Corporation, amounting to RM5.28 million in Q1 2025, a decrease from RM8.03 million in Q1 2024. This significant reduction in one-off gains played a major role.
- Reduced Share of Profit from Associates: JCBNEXT’s share of profit from equity-accounted associates decreased by 45.0% to RM1.07 million (Q1 2025) from RM1.95 million (Q1 2024).
- While 104 Corporation, a key associate in Taiwan’s HR services, reported higher net profit, JCBNEXT’s share decreased due to a lower equity interest (12.55% as of Q1 2025 compared to 17.46% in Q1 2024).
- Another associate, Innity Corporation Berhad, registered a higher net loss, further impacting the group’s share of profits.
- Foreign Exchange Swing: The group experienced foreign exchange losses of RM0.08 million in the current quarter, a stark contrast to the foreign exchange gains of RM1.10 million recorded in Q1 2024. This swing from gain to loss also contributed to the lower PBT.
To provide a clearer picture, if we exclude the one-off gains on disposal of shares, the adjusted PBT for Q1 2025 stood at RM2.44 million, compared to an adjusted PBT of RM3.83 million in Q1 2024. This indicates that the core operating profitability, excluding significant one-off events, also saw a decline.
Earnings Per Share (EPS)
Reflecting the lower net profit, the basic earnings per share also saw a reduction:
Q1 2025 Basic EPS
5.59 sen
Q1 2024 Basic EPS
8.74 sen
Segment Performance & Financial Health
The Investment Holding segment remains the primary driver of the group’s revenue and overall profit. The “Others” segment, which includes online advertising, continues to report an operating loss, though it’s a minor contributor to the overall financial picture.
The company also conducted a share buy-back during the quarter, acquiring 262,000 shares at an average price of approximately RM1.63 per share, totaling RM426,855. These shares are held as treasury shares.
Financially, JCBNEXT maintains a healthy cash position, benefits from good cash flow from its investments, and importantly, does not carry any material debt. This strong financial foundation provides flexibility in navigating market conditions and pursuing new opportunities.
Navigating the Future: Risks and Prospects
Looking ahead, JCBNEXT’s prospects are intertwined with both global economic trends and its strategic initiatives. The company acknowledges a global economy that has begun to stabilize but is also characterized by rising uncertainties.
Global Headwinds:
- Trade Tensions: Escalating trade tensions and an increasingly volatile global environment, as highlighted by the International Monetary Fund (IMF), pose significant downside risks.
- Financial Market Adjustments: Rapidly shifting policy positions or deteriorating market sentiment could tighten global financial conditions, impacting investment valuations.
- Economic Growth Constraints: A deepening trade war and policy uncertainty could constrain economic growth in both the near and long term.
Company-Specific Considerations:
- Property Tenancy: The tenant for Wisma JcbNext will be moving out by August 31, 2025. The group has already engaged real estate agents to secure new tenants, which is crucial for maintaining rental income.
- Seasonality: The company notes that recruitment activities, which are relevant to its associate 104 Corporation, may slow down towards year-end and during major holidays, potentially impacting future performance from this segment.
Strategic Outlook:
Despite these challenges, JCBNEXT aims to continue deriving income primarily from dividend income from its quoted investments and rental income from its investment property. The Board and management are actively identifying and evaluating new investments that can contribute positively to the group’s financial performance. The company’s healthy cash position and lack of material debt provide a strong platform for these strategic moves.
Summary and
In summary, JCBNEXT BERHAD’s Q1 2025 report presents a mixed bag. The company demonstrated strong revenue growth, primarily driven by its investment holdings, which is a positive sign of its asset-generating capabilities. However, the decline in profit before tax and earnings per share highlights the impact of lower one-off investment gains, reduced share of associate profits, and adverse foreign exchange movements compared to the previous year. It’s crucial for investors to differentiate between recurring operational income and one-off gains when evaluating the company’s performance.
The group’s healthy financial position, marked by strong cash flow and minimal debt, provides a solid foundation. While global uncertainties and specific operational changes like the Wisma JcbNext tenancy need to be monitored, the company’s proactive stance in seeking new investments could pave the way for future growth.
Key risk points to keep an eye on include:
- The impact of global trade tensions and economic uncertainties on investment valuations.
- The successful procurement of new tenants for Wisma JcbNext to maintain rental income.
- The performance of its key associates, particularly 104 Corporation and Innity Corporation Berhad, and their contribution to JCBNEXT’s share of profits.
- Fluctuations in foreign exchange rates, especially given past impacts.
