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Hello fellow investors and market enthusiasts!
Ever wondered what goes on behind the scenes of a company navigating a challenging market? Today, we’re diving deep into the First Quarter (Q1) 2024 financial report of BTM RESOURCES BERHAD (BTM). This report offers a fresh look at the company’s performance, strategic moves, and the hurdles it’s currently facing. While BTM continues to operate in the timber industry, its recent financial results show significant efforts to reduce losses, coupled with a strategic pivot towards renewable energy.
Let’s break down the numbers and see what BTM’s latest quarter tells us about its journey forward.
Q1 2024 Performance: A Closer Look at the Numbers
BTM’s Q1 2024 results reveal a mixed picture. While the company still recorded a loss, there’s a notable improvement compared to the same period last year and the immediate preceding quarter. This reduction in loss is a key highlight, signaling positive internal adjustments.
Revenue Growth and Reduced Losses
The Group’s revenue for the first quarter increased, primarily driven by higher sales of its manufactured wood products. More importantly, the pre-tax loss saw a substantial reduction.
Q1 2024 Performance
Revenue: RM1.53 million
Loss Before Tax: RM(0.84) million
Loss After Tax: RM(0.84) million
Basic Loss Per Share: (0.07) sen
Compared to Q1 2023
Revenue: RM1.28 million
Loss Before Tax: RM(14.84) million
Loss After Tax: RM(14.84) million
Basic Loss Per Share: (1.42) sen
This translates to a remarkable 19.70% increase in revenue compared to Q1 2023. The loss before tax also saw a drastic 94.35% reduction. This significant improvement in profitability, despite still being in a loss position, was largely attributed to a gain of RM1.08 million from the disposal of a subsidiary company (Syarikat Maskayu Sawmill Sdn. Bhd.) and lower operating expenses in the current quarter. It’s also worth noting the absence of a substantial share-based payment expense (RM11.47 million) that was recorded in the previous financial year’s corresponding quarter.
Q1 2024 Performance
Revenue: RM1.53 million
Loss Before Tax: RM(0.84) million
Loss After Tax: RM(0.84) million
Compared to Preceding Quarter (Q4 2023)
Revenue: RM0.87 million
Loss Before Tax: RM(1.46) million
Loss After Tax: RM(1.45) million
When compared to the immediate preceding quarter (Q4 2023), BTM’s revenue jumped by an impressive 76.99%, and its pre-tax loss narrowed by 42.68%. This indicates a positive sequential trend, driven by higher sales of manufactured wood products and continued efforts to reduce operating expenses.
Financial Health: Balance Sheet and Cash Flow
As of March 31, 2024, BTM’s financial position shows some shifts:
| Category | 31/03/2024 (RM’000) | 31/12/2023 (RM’000) |
|---|---|---|
| Total Assets | 95,553 | 98,162 |
| Total Equity | 72,777 | 73,615 |
| Total Liabilities | 22,776 | 24,547 |
| Net Tangible Assets Per Share (RM) | 0.06 | 0.06 |
The slight decrease in total assets and equity is mainly due to the comprehensive loss incurred during the period. The Net Tangible Assets Per Share remained stable at RM0.06, indicating that the underlying asset value per share is holding steady.
From a cash flow perspective, the Group recorded a net cash outflow from operating activities of RM2.13 million, compared to RM21.60 million in the same period last year. This significant reduction in cash used in operations is a positive sign, reflecting the improved loss position and better working capital management. The net cash inflow from investing activities was RM0.99 million, largely due to the proceeds from the disposal of a subsidiary. Overall, cash and cash equivalents decreased slightly to RM18.06 million from RM19.41 million at the start of the year.
It’s also noteworthy that BTM has significant capital commitments of RM121.1 million as at March 31, 2024, primarily related to its renewable energy projects, which we’ll discuss next.
Navigating Risks and Charting Future Prospects
BTM’s traditional timber business faces inherent challenges, primarily its reliance on the availability of raw materials and the fluctuating demand influenced by global economic conditions. The directors acknowledge that 2024 is expected to remain challenging, echoing the broader sentiment across many industries.
Strategic Diversification into Renewable Energy
To mitigate these challenges and build a more sustainable future, BTM is actively pursuing its ventures into the renewable energy sector, specifically biomass power plants.
The company has two significant Renewable Electrical Energy Power Plant (REPP) projects underway:
- 10MW REPP Project (via BTM Biomass Products Sdn Bhd): This project, with a Net Export Capacity (NEC) of 10 MWh, has a Feed-in Tariff (FiT) approval for 21 years at RM0.3486 per kWh. The scheduled FiT commencement date has been extended to July 23, 2024. This project involves substantial engineering, procurement, construction, and commissioning (EPCC) works, backed by banking facilities.
- 8MW REPP Project (via BTM Land Sdn Bhd): This second biomass REPP, with an installed capacity of 8MW and NEC of 7MW, secured FiT approval at RM0.3383 per kWh for 21 years. Its scheduled FiT commencement date is May 11, 2025.
These projects represent a crucial strategic shift for BTM, aiming to diversify its income streams and tap into the growing demand for sustainable energy. However, the delays in commencement dates for these projects highlight the complexities and regulatory hurdles involved in large-scale infrastructure development.
Another point to note is the ongoing process for registering the title of a freehold industrial land (with a carrying amount of RM3.5 million) under the subsidiary’s name, pending the discharge of a charge by a bank. This is an administrative matter that the company is actively addressing, accruing estimated expenses for its resolution.
Summary and
BTM’s Q1 2024 report showcases a commendable effort in significantly narrowing its losses and achieving revenue growth in its core timber business, driven by higher sales and disciplined cost management. The gain from the disposal of a subsidiary also played a crucial role in improving the bottom line. While the traditional timber sector faces headwinds from global economic conditions and raw material availability, the company’s long-term strategy is firmly anchored in its renewable energy ventures.
The progress on the biomass power plants, despite revised timelines, indicates a clear path towards diversification and potentially more stable revenue streams in the future. However, the successful execution and timely commissioning of these large-scale projects will be paramount for BTM’s long-term financial health and growth trajectory.
Disclaimer: This blog post is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
Key points to monitor moving forward include:
- The impact of global economic conditions on timber product demand.
- The company’s ability to consistently secure raw materials for its timber operations.
- The successful and timely commissioning of the 10MW and 8MW biomass power plants.
- Resolution of the outstanding freehold industrial land title registration.
BTM is clearly working to turn things around, evidenced by the reduced loss and strategic pivot towards renewable energy. However, the timber business faces headwinds, and the REPP projects are critical for future growth, but come with their own timelines and complexities.
Given BTM’s efforts to diversify into renewable energy, do you believe these projects will be sufficient to offset the challenges in their traditional timber business and drive sustainable growth in the coming years? Share your thoughts in the comments below!
