Key Financial Highlights: A Quarter of Contraction

The first quarter of 2025 saw FEHB grappling with a challenging market environment, reflected in a notable decline in revenue and an increase in losses compared to the same period last year. Here’s a closer look at the core figures:

Revenue Performance

The Group’s revenue for the first quarter ended 31 March 2025 experienced a significant 22.7% decrease when compared to the corresponding quarter in the previous year. This downturn was primarily attributed to a slowdown in the Group’s oil bunkering and petroleum trading business segment, exacerbated by a weakened US Dollar.

Looking at the immediate preceding quarter, Q4 2024, revenue stood at RM86.97 million. The current quarter’s revenue of RM68.70 million marks a 21.0% decline. This sequential drop was mainly due to decreased sales from the oil bunkering segment (approximately RM17.26 million) and the smart devices segment (approximately RM1.03 million).

Profitability Trends

FEHB reported a loss before taxation of RM1.98 million for Q1 2025, a substantial increase in loss compared to RM0.27 million in the same quarter last year. This deterioration was mainly driven by the lower sales recorded in the current period.

However, when compared to the immediate preceding quarter (Q4 2024), where the loss before taxation was RM14.61 million, the current quarter’s loss of RM1.98 million represents an 86.5% improvement. The higher loss in Q4 2024 was primarily due to a goodwill impairment of RM11.00 million and an impairment from expected credit loss of approximately RM1.51 million.

The net loss after taxation for Q1 2025 stood at RM1.93 million, a significant increase from RM0.075 million in Q1 2024. The basic loss per share also widened to 0.45 sen from 0.10 sen year-on-year.

Total comprehensive loss for the first quarter was RM3.58 million, a substantial increase from RM0.20 million in the previous year’s corresponding quarter. This figure includes a net decrease in fair value of equity investments of RM1.65 million.

Segmental Performance Overview

A deeper dive into FEHB’s various business segments reveals the specific areas contributing to the overall performance:

The oil trading and bunkering segment, traditionally a major revenue contributor, saw a significant decline in revenue and shifted from a profit to a loss. The Smart Devices segment, while showing revenue growth, continued to incur losses. Encouragingly, the Renewable Energy segment recorded a small profit, a turnaround from a loss in the previous year.

Financial Health and Cash Flow

Assessing the Group’s financial position provides further context to its operational performance:

Total assets decreased slightly from RM97.46 million at the end of 2024 to RM93.90 million as of 31 March 2025. Similarly, total equity saw a decline from RM89.18 million to RM85.60 million. Net tangible assets per share also reduced from 13.8 sen to 13.1 sen.

On the cash flow front, FEHB demonstrated resilience in its operating activities. The Group generated RM0.92 million in net cash from operating activities in Q1 2025, a significant improvement from the RM1.35 million cash used in operations in Q1 2024. However, investing activities utilized RM2.28 million, mainly due to acquisition of equity investments and withdrawal of fixed deposits. Financing activities also saw a net cash outflow of RM0.94 million, primarily due to repayment of term loans.

Strategic Outlook and Future Prospects

Despite the challenging quarter, FEHB has outlined clear strategies and identified opportunities across its various segments:

Oil Bunkering and Trading Segment

The management anticipates continued growth in global demand for oil bunkering, driven by increasing seaborne trade and longer shipping routes due to geopolitical conflicts. However, the segment faces headwinds from stricter emission regulations, environmental concerns, and volatile global economic conditions, including potential tariffs and inflationary pressures. The company will need to navigate these complexities carefully.

Smart Devices Segment

FEHB is committed to boosting sales revenue in this segment by diversifying its product offerings beyond mobile phones to include other electronic products and complementary smart consumer devices. A key strategic shift involves moving from retail, direct-to-consumer products towards more business-to-business solutions, particularly those tailored for smart city applications. This pivot aims to tap into opportunities supporting local municipalities in smart city development.

Renewable Energy Segment

This segment holds significant promise, fueled by growing climate change awareness and a global shift towards sustainable energy. Malaysia’s ambitious Energy Transition Plan targets 31% renewable energy in total installed capacity by 2025 and 40% by 2035. Government initiatives like Net Energy Metering (NEM), Large Scale Solar PV (LSS), and Supply Agreement with Renewable Energy (SARE) are expected to sustain strong demand. Following the disposal of its 1.3MWp solar PV system, FEHB’s subsidiary, Fast Solar Sdn Bhd, is now leveraging its experience in corporate power purchase agreements and regulatory compliance to explore entry into the LSS space.

Proposed Share Capital Reduction

A significant corporate proposal announced after the quarter end, on 10 April 2025, is a proposed share capital reduction of RM100.00 million. This exercise aims to cancel issued share capital that is no longer represented by available assets. The resulting credit of RM100.00 million will be used to offset accumulated losses, with any remaining balance credited to capital reserves, providing an additional buffer against future losses. This move, subject to shareholder approval on 23 June 2025, is a strategic step to improve the company’s financial position and balance sheet health.