JAG Berhad’s Q1 FY2025: Navigating Headwinds with Strategic Shifts
Greetings, fellow investors and market enthusiasts! Today, we’re diving deep into the latest unaudited quarterly report from
for the period ended 31 March 2025. This report offers a candid look at the company’s performance, revealing a challenging quarter marked by a decline in revenue and a shift to a loss position. However, it also highlights strategic maneuvers and a forward-looking approach as the company navigates global uncertainties.
JAG Berhad, primarily known for its Total Waste Management (TWM) business segment which involves recycling and recovery activities, finds itself at a critical juncture. While the headline figures might raise eyebrows, a closer examination reveals the underlying factors and the strategic responses being implemented. Let’s break down the key takeaways from this report.
Financial Performance: A Challenging Quarter
The first quarter of the financial year 2025 saw JAG Berhad facing significant headwinds, resulting in a notable decline in its financial performance compared to the same period last year.
Q1 FY2025
Revenue: RM46.5 million
(Loss) Before Taxation: RM(6.4) million
(Loss) After Taxation: RM(6.4) million
Basic (Loss) Per Share: (0.88) sen
Q1 FY2024
Revenue: RM52.7 million
Profit Before Taxation: RM4.3 million
Profit After Taxation: RM3.0 million
Basic Earnings Per Share: 0.49 sen
As you can see, the Group’s revenue decreased by 11.9% to RM46.5 million. More significantly, the company swung from a profit of RM3.0 million in the first quarter of 2024 to a loss of RM6.4 million in the current quarter. This substantial shift, representing a 313.4% decline in profit after taxation, was a major highlight of the report, leading to a basic loss per share of (0.88) sen compared to earnings of 0.49 sen previously.
Segmental Performance: Mixed Results and Key Drivers
To understand the overall performance, it’s crucial to look at how each business segment contributed:
| Business Segment | Q1 FY2025 Revenue (RM’000) | Q1 FY2024 Revenue (RM’000) | Revenue Change (%) | Q1 FY2025 Segment Result (RM’000) | Q1 FY2024 Segment Result (RM’000) | Result Change (%) |
|---|---|---|---|---|---|---|
| Manufacturing and trading activities (TWM) | 44,597 | 51,090 | -12.7% | (2,031) | 5,589 | >100.0% (Loss vs Profit) |
| Lifestyle and services | 1,493 | 1,516 | -1.5% | (491) | (536) | 8.4% (Improved Loss) |
| Property investment and development | 382 | 140 | >172.9% | (1,366) | (395) | >100.0% (Increased Loss) |
| Investment holding | N/A | N/A | N/A | (1,646) | 558 | >100.0% (Loss vs Profit) |
- Manufacturing and Trading Activities (Total Waste Management): This core segment, accounting for approximately 96% of total revenue, saw a 12.7% decline in revenue. The report attributes this contraction to a slowdown in demand from international clients, particularly due to uncertainty surrounding the anticipated US tariff policy. Customers adopted a more cautious procurement approach, leading to delayed and reduced orders. Volatility in commodity prices also impacted margins. This segment also shifted from a profit to a loss.
- Lifestyle and Services: This segment maintained stable revenue at RM1.5 million, with operational losses continuing, reflecting the cost structure of certain non-performing units. However, the loss itself slightly improved by 8.4% compared to the prior year.
- Investment Holding: This segment recorded a loss of RM1.6 million, a stark contrast to a profit of RM0.6 million previously. This was mainly due to fair value losses on quoted investments, impacted by weaker market sentiment and external macroeconomic concerns, including US trade policies.
- Property Investment and Development: This segment saw a significant revenue increase of more than 172%, primarily due to a higher tenancy rate at Wisma JAG. However, it reported a larger loss of RM1.4 million. This increased loss was largely due to the recognition of Real Property Gains Tax (RPGT) and other disposal costs (legal fees, commission) arising from the completed divestment of land held under JAG Eco Sdn Bhd.
Financial Health and Cash Flow Dynamics
Looking at the balance sheet, JAG’s total assets saw a slight decrease from RM309.1 million at the end of December 2024 to RM305.6 million as of 31 March 2025. Total equity also decreased from RM214.0 million to RM203.7 million, leading to a slight dip in net assets per share from 29.15 sen to 28.32 sen.
However, a bright spot was the significant increase in cash and bank balances, which rose from RM5.2 million to RM10.1 million. This was largely driven by a strong positive cash flow from investing activities, which recorded a net cash inflow of RM7.8 million, a substantial improvement from a net outflow of RM1.9 million in the same period last year. This positive shift was primarily due to the proceeds from the disposal of land (net RM9.4 million) by its subsidiary, JAG Eco Sdn Bhd.
On the financing side, the company continued to acquire treasury shares, bringing the total held to 37.4 million shares with a carrying amount of RM9.9 million. This indicates a continued strategy of share buybacks.
Risks and Prospects: Navigating the Future
JAG Berhad acknowledges the ongoing global macroeconomic uncertainties and evolving international trade policies. The company’s future outlook hinges on several key strategies:
- Strengthening Core Business: The Total Waste Management (TWM) segment is expected to remain the primary revenue and profit contributor. The company plans to enhance sourcing capabilities and invest in production capacity, process efficiency, and relevant technologies to ensure long-term sustainability.
- Monitoring US Tariff Policy: The recent announcement of new US tariff policies includes a 90-day implementation delay. Crucially, JAG notes that its primary e-waste sourcing from Malaysia’s semiconductor sector currently falls under the exemption list. The company is closely monitoring the situation and will adapt should any changes impact its operations.
- Strategic Portfolio Review: JAG is undertaking a strategic review of its business portfolio, including evaluating non-performing segments for potential rationalisation or divestment. This initiative aims to refocus on business areas with higher growth potential and strategic value, a move that could streamline operations and improve overall profitability.
- Prudent Financial Management: The Group will continue to adopt a cautious approach in managing its operations and financial resources, implementing measures to mitigate risks and enhance adaptability.
Summary and Outlook
Summary and
JAG Berhad’s first quarter of FY2025 reflects a challenging operating environment, particularly for its core Total Waste Management business, which was impacted by global demand slowdowns and trade policy uncertainties. The shift to a net loss is a significant concern, driven by lower revenue, increased operating costs from bonuses and fair value losses on investments, and non-recurring expenses related to a land disposal.
However, the report also highlights proactive steps taken by the management. The successful divestment of land significantly bolstered the company’s cash position, demonstrating an ability to unlock value from its assets. The ongoing strategic review of non-performing segments and the focus on enhancing core TWM capabilities suggest a commitment to improving long-term resilience and profitability.
Key points from this report include:
- Revenue decline of 11.9% and a swing to a net loss of RM6.4 million, primarily due to reduced demand in the TWM segment and fair value losses in investment holdings.
- Significant positive cash flow from investing activities driven by a land disposal, improving the company’s cash reserves.
- Ongoing strategic review of business segments, aiming for rationalization and divestment of non-performing units to focus on higher growth areas.
- Close monitoring of external macroeconomic factors, especially the US tariff policy, which could impact the core TWM business.
While the immediate financial results present a tough picture, JAG Berhad appears to be taking decisive actions to streamline its operations and navigate the current economic climate. The focus on strengthening its core business and divesting underperforming assets could pave the way for a more resilient future.
What are your thoughts on JAG Berhad’s strategic direction? Do you believe the company’s proactive measures, such as the land divestment and portfolio review, will be sufficient to overcome the current market challenges and return to profitability in the coming quarters? Share your insights in the comments section below!
