Berjaya Land’s Q3 FY2025: A Deep Dive into Performance and Prospects

Greetings, fellow investors! Today, we’re unboxing the latest financial report from Berjaya Land Berhad (BLAND) for its third quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s operational health and strategic direction amidst evolving market conditions. While some segments show promising growth, the overall picture reveals a complex interplay of factors, including the lingering impact of past exceptional items and ongoing legal proceedings. Let’s break down the numbers and understand what they mean for BLAND’s journey ahead.

Core Data Highlights: Navigating the Numbers

Q3 FY2025 Performance: A Mixed Bag

For the quarter ended 31 March 2025, Berjaya Land recorded a commendable increase in revenue and operating profit compared to the same period last year. However, the pre-tax profit saw a significant dip, primarily due to exceptional gains recorded in the prior year’s corresponding quarter. Let’s look at the key figures:

Revenue for the current quarter surged by 9% to RM2.13 billion, largely driven by a significant increase in STM Lottery’s sales due to an exceptional jackpot surge, higher overall occupancy rates in hotels and resorts, and a 14% revenue increase from H.R. Owen Plc (though currency translation softened this to 6.9% in Ringgit terms). This growth helped offset lower contributions from the property development segment, which saw reduced revenue following the completion of The Tropika, Bukit Jalil project last financial year.

Operating profit also saw a robust 35% increase to RM108.1 million, again primarily boosted by STM Lottery’s strong performance and lower prize payouts. However, the pre-tax profit saw a 70% decline. It’s crucial to note that the previous year’s corresponding quarter benefited from substantial exceptional gains totaling RM99.39 million from the deemed disposal and re-measurement of equity interests in an associated company. Excluding these one-off gains, the current quarter’s pre-tax profit of RM34.7 million would actually be higher than the adjusted RM15.90 million from the prior year, indicating an underlying operational improvement.

Year-to-Date Performance: A Broader Perspective

For the nine-month period ended 31 March 2025, the Group’s revenue remained relatively stable, while pre-tax profit saw a decline compared to the previous year’s corresponding period.

The nine-month revenue was marginally lower at RM5.64 billion, again primarily due to the property development segment’s reduced contribution. However, this was largely mitigated by strong performances from STM Lottery, hotels and resorts, and H.R. Owen. The pre-tax profit for the nine-month period decreased by 34% to RM139.0 million. Similar to the quarterly trend, this decline is influenced by the significant exceptional gains recorded in the prior year’s period, along with lower contributions from property development. Positive contributions from STM Lottery, hotels and resorts, and a dividend distribution of RM68.06 million from an associated company helped to cushion the impact.

Quarter-on-Quarter Momentum: Building on Strengths

Comparing the current quarter to the preceding quarter (Q2 FY2025), Berjaya Land showed strong revenue growth, although pre-tax profit saw a slight decline.

Revenue increased by 23% from the preceding quarter, reaching RM2.13 billion. This was driven by stronger sales from STM Lottery (including an additional draw), higher property progress billings from projects like Pangsapuri Azalea and OAKA Residences, and increased car sales from H.R. Owen. The hotels and resorts segment, however, saw lower revenue due to reduced average room rates and occupancy after the seasonal festive period in the preceding quarter. The pre-tax profit decreased marginally by 8% to RM34.7 million, primarily due to the lower contribution from the hotels and resorts segment which benefited from seasonal festive periods in the preceding quarter. This was partially offset by improved performance from STM Lottery and H.R. Owen.

Risks and Future Prospects: Navigating the Landscape

Berjaya Land’s future hinges on a blend of domestic economic resilience and its ability to manage ongoing challenges. The Directors are cautiously optimistic about the remaining quarter of the financial year ending 30 June 2025, anticipating satisfactory performance.

Prospects: Tailwinds for Domestic Businesses

• Malaysia’s economic growth is projected to be robust, fueled by strong domestic demand and a moderating inflation rate.
• The Group expects its domestic business segments, particularly gaming and tourism, to improve, benefiting from strong consumer spending and increased tourism activities.
• The gaming business is anticipated to continue its upward trajectory in per-draw sales, sustained by consumer interest in jackpot games.

Risks: Challenges on the Horizon

While the outlook is positive, BLAND acknowledges several factors that could impact its performance:

• **Economic and Industry Sensitivity:** The property development division remains sensitive to cyclical economic conditions, while hotels and resorts are affected by seasonality (monsoon in East Coast, winter in Iceland) and energy costs. The toto betting operations can be influenced by illegal gaming activities.
• **Geopolitical Tensions and Trade Tariffs:** The ongoing geopolitical tensions and inflationary tariffs imposed by the USA government introduce global uncertainties that the Group is actively monitoring.
• **Litigation and Legal Uncertainties:** The Group is involved in several material legal proceedings, which, while some are progressing favorably, still represent potential financial and operational risks until fully resolved.

Summary and Outlook

Berjaya Land Berhad’s Q3 FY2025 report presents a mixed yet intriguing picture. The Group demonstrated resilience in revenue growth, particularly in its core gaming and automotive segments, which have largely compensated for the completion of a major property project. While the reported pre-tax profit shows a decline due to the absence of significant exceptional gains from the previous year, an underlying operational improvement is evident when these one-off items are factored out.

The company is navigating a complex environment, with domestic segments poised for growth driven by consumer spending and tourism. However, global uncertainties and a handful of significant ongoing legal cases, such as the GMOC Project Arbitration and the BCity Project Legal Proceedings (where a judgment on compensation is expected soon), will continue to be key areas for investors to monitor. The Amat Muhibah Tax Dispute also adds another layer of complexity, though the company’s legal advisors believe they have an arguable case.

Overall, Berjaya Land appears to be on a path of operational recovery and strategic adjustments. The focus will now be on how effectively the management capitalizes on favorable domestic conditions and resolves its outstanding legal matters to unlock further value.

Given these dynamics, do you believe Berjaya Land can sustain its operational improvements and navigate its legal challenges effectively in the coming quarters? Share your thoughts in the comments below!