TCS Group Holdings Berhad: A Q1 2025 Report — Navigating Revenue Headwinds with a Profit Boost
Greetings, fellow investors and market enthusiasts! Today, we’re delving into the latest financial report from TCS Group Holdings Berhad (TCS) for the first quarter ended 31 March 2025. This report presents a fascinating mix of challenges and strategic wins, showcasing the company’s resilience in a dynamic construction landscape. While revenue saw a significant dip, the bottom line tells a different story, partly thanks to a notable one-off event. Let’s unpack the numbers and understand what’s truly driving TCS’s performance and what lies ahead.
Key Takeaway: TCS reported a substantial decrease in revenue for Q1 2025 compared to the same period last year. However, profit after tax (PAT) saw an improvement, primarily driven by a one-off reversal of impairment on financial assets. The company also announced securing a new project and the upliftment of a stop-work order on a major development, signaling positive operational momentum despite the top-line contraction.
Core Data Highlights: A Closer Look at Q1 2025 Performance
Revenue Performance: A Significant Contraction
TCS’s revenue for the first quarter of 2025 stood at RM42.39 million, a notable decrease from RM114.42 million reported in the first quarter of 2024. This represents a substantial 62.96% reduction. The company attributes this decline to several factors:
- Project Completions: Previous major projects such as M Arisa at Sentul, IOI Moxy Hotel at Putrajaya, and Tropicana Miyu at Petaling Jaya have been completed.
- Early Stages of New Projects: Newer projects like Arcadia Residences, Setia Bayuemas, i23 & i24 Semi-D factories, and the Pan Borneo Highway Phase 1b Work Package 32 are still in their preliminary construction phases, contributing less to current revenue.
- J. Satine Stop-Work Order: The stop-work order issued for the J. Satine project on 7 November 2024, which was only uplifted on 21 April 2025, also impacted revenue generation during the quarter.
Q1 2025 Revenue
RM42.39 million
Q1 2024 Revenue
RM114.42 million
Profitability Turnaround: The Impact of One-Off Gains
Despite the significant drop in revenue, TCS managed to improve its profitability. Profit before tax (PBT) increased to RM0.37 million in Q1 2025 from RM0.30 million in Q1 2024, an increase of 21.38%. Similarly, profit after tax (PAT) attributable to owners of the company rose to RM0.386 million from RM0.305 million in the comparative quarter, marking a 26.56% improvement.
This positive shift in profit, contrasting with the revenue decline, was largely due to a one-off reversal of impairment on financial assets amounting to RM0.33 million. This adjustment effectively boosted the bottom line for the quarter.
Q1 2025 Profit Attributable to Owners
RM0.386 million
Q1 2024 Profit Attributable to Owners
RM0.305 million
Earnings Per Share (EPS): A Diluted Picture
Despite the higher net profit, basic earnings per share (EPS) saw a slight decrease from 0.07 sen in Q1 2024 to 0.06 sen in Q1 2025. This apparent paradox is explained by the increase in the weighted average number of shares outstanding, which grew from 429,000,000 shares in Q1 2024 to 600,602,000 shares in Q1 2025. This indicates a dilution effect from new share issuances, likely from the rights issue with free warrants in the previous financial year.
Q1 2025 Basic EPS
0.06 sen
Q1 2024 Basic EPS
0.07 sen
Financial Health and Cash Flow: A Positive Turnaround
As of 31 March 2025, TCS’s total assets stood at RM223.92 million, a decrease from RM242.54 million at the end of 2024. Total liabilities also saw a reduction, from RM162.21 million to RM143.22 million, indicating a healthier balance sheet. Total equity increased slightly to RM80.70 million from RM80.33 million, maintaining a net asset per share of RM0.13.
A significant highlight from the report is the remarkable turnaround in cash flow from operating activities. The Group generated RM6.52 million in cash from operations in Q1 2025, a stark improvement from the RM4.79 million cash used in operations during the same period last year. This positive operational cash flow is crucial for the company’s liquidity and future investments.
Q1 2025 Net Cash from Operating Activities
RM6.52 million (generated)
Q1 2024 Net Cash from Operating Activities
RM4.79 million (used)
Summary of Key Financial Figures (Q1 2025 vs Q1 2024)
| Financial Metric | Q1 2025 (RM’000) | Q1 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 42,389 | 114,415 | -62.96% |
| Gross Profit | 2,702 | 3,429 | -21.20% |
| Profit Before Tax | 369 | 304 | +21.38% |
| Profit Attributable to Owners | 386 | 305 | +26.56% |
| Basic EPS (sen) | 0.06 | 0.07 | -14.29% |
| Net Cash from Operations | 6,516 | (4,790) | Turnaround |
Risk and Prospect Analysis: Building Towards the Future
Industry Tailwinds and New Opportunities
Looking ahead, TCS remains optimistic, buoyed by the positive momentum in the Malaysian construction industry. The sector saw a robust 16.6% growth to RM42.9 billion in the first quarter of 2025, driven by expansions in special trade activities and residential building sub-sectors. This healthy industry environment positions TCS to capture more opportunities.
A significant boost to their outlook is the recent securing of a RM216.9 million contract for commercial serviced apartments at Federal Avenue from Impiana Impresif Sdn. Bhd. (IISB), a subsidiary of Bandar Raya Developments Berhad (BRDB). This returning client relationship underscores TCS’s proven track record for quality and timely project completion.
J. Satine Project: Back on Track
Adding to the positive news, the stop-work order for the J. Satine mixed development project was officially uplifted by Dewan Bandaraya Kuala Lumpur (DBKL) on 21 April 2025. Crucially, an Independent Check Consultant Report reaffirmed that the incident leading to the stop-work order was not caused by TCS, with test results confirming that the quality of materials and workmanship exceeded required standards. This resolution removes a significant operational overhang and allows the project to resume full swing.
Challenges and Ongoing Litigation
While the prospects are encouraging, TCS remains mindful of the dynamic macroeconomic environment and business operating conditions. Furthermore, the company is still navigating significant material litigation cases, which could pose financial and operational risks:
- Adjudication Proceeding: TCS Construction Sdn Bhd (TCSCSB) secured an adjudication decision in its favour for RM6.14 million plus interest and costs against MPM Project Management Sdn Bhd (MPM). However, KTCC Mall Sdn Bhd (KTCCMSB), which was ordered to pay on behalf of the wound-up MPM, has appealed the High Court order and obtained a stay of execution. The appeal hearing is fixed for 5 August 2025.
- Legal Proceeding: TCSCSB is also pursuing a claim for outstanding sums and retention monies amounting to RM7.42 million against MPM and other defendants. While MPM’s counterclaim for RM57.5 million was withdrawn, TCSCSB’s suit was temporarily stayed. The trial for this case is now fixed for 18 July 2025, 4-5 August 2025, and 11 September 2025.
These ongoing legal battles, while some are in TCS’s favour, introduce an element of uncertainty regarding the timing and ultimate recovery of funds. Investors should continue to monitor these developments closely.
Summary and
TCS Group Holdings Berhad’s Q1 2025 report paints a picture of a company in transition. While the sharp decline in revenue reflects the natural cycle of project completions and the early stages of new ventures, the underlying profitability, boosted by a one-off impairment reversal, shows a managed financial performance. The significant turnaround in cash flow from operations is a strong positive indicator of improved liquidity and operational efficiency.
The future outlook is promising, with a healthy order book, a growing construction industry, and the resolution of the J. Satine project issue. However, the ongoing material litigations present a notable risk that could impact the company’s financial position and cash flow in the medium term. It is crucial for potential and existing investors to understand that while the company has secured favorable adjudication decisions, the actual recovery of these funds is subject to the outcomes of ongoing appeals and trials.
Key risk points to consider:
- The timing and certainty of recovering the adjudicated sum of RM6.14 million due to the ongoing appeal and stay of execution.
- The outcome of the separate legal proceeding for RM7.42 million, with trial dates set for later in 2025.
- The ability of new projects to ramp up quickly and effectively offset the revenue gap left by completed projects.
- The broader macroeconomic environment and its potential impact on the construction sector and project pipeline.
TCS is clearly focusing on leveraging the positive industry trends and its proven track record. The management’s commentary reflects a proactive stance in securing new projects and addressing operational challenges. The Q1 results, while mixed on the surface, reveal deeper operational improvements and strategic advancements that warrant attention.
Final Thoughts and What’s Next
As a seasoned observer of the Malaysian market, I find TCS’s Q1 2025 report to be a testament to the dynamic nature of the construction industry. The revenue dip is a temporary setback as new projects gain momentum, and the profit boost from the impairment reversal, while one-off, provides a cushion. The strong operational cash flow is particularly encouraging, indicating robust underlying business health.
The key will be how effectively TCS executes its new projects and navigates the ongoing legal complexities. The resolution of the J. Satine issue is a positive sign of the company’s ability to overcome operational hurdles. Do you believe TCS can maintain this positive momentum in cash flow and project wins throughout the year?
Share your thoughts and insights in the comments section below! Let’s discuss how you see TCS Group Holdings Berhad performing in the coming quarters. Don’t forget to follow for more in-depth analyses of Malaysian companies!
