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KPS Berhad’s Q1 2025 Report: A Strong Turnaround in Continuing Operations Amidst Global Headwinds
Hello, fellow investors! Today, we’re diving into the latest financial performance of KUMPULAN PERANGSANG SELANGOR BERHAD (KPS Berhad) for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into the company’s strategic resilience and operational adjustments in a dynamic market. While some areas faced headwinds, the overall picture from continuing operations paints a significantly improved performance, highlighted by a remarkable profit turnaround and a recently approved dividend payout. Let’s unpack the details!
Core Financial Highlights: A Quarter of Significant Shifts
KPS Berhad’s Q1 2025 results showcase a notable rebound in its core businesses. The most striking aspect is the substantial improvement in profitability from continuing operations, despite a complex global economic landscape. Let’s look at the key figures:
Revenue Performance
The Group’s revenue from continuing operations saw a healthy increase, driven primarily by its manufacturing and trading sectors. This growth demonstrates the company’s ability to expand its top line in its ongoing business segments.
Q1 2025 Revenue
RM 243,537,000
Q1 2024 Revenue
RM 233,837,000
This represents a 4% increase in revenue compared to the same quarter last year, a commendable achievement. The rise was largely attributed to an RM11.5 million increase in the manufacturing sector and an RM0.1 million improvement in the trading sector. However, it’s important to note that this was partially offset by the absence of contributions from property investment, following the disposal of Plaza Perangsang in July 2024.
Profit Before Tax (PBT) and Net Profit Turnaround
Here’s where the report truly shines for continuing operations. KPS Berhad achieved an impressive turnaround in its profit before tax and net profit attributable to owners from continuing operations. This was a result of higher revenue, coupled with strategic cost management.
Q1 2025 PBT (Continuing Ops)
RM 12,276,000
Q1 2024 PBT (Continuing Ops)
RM 2,275,000
The PBT from continuing operations surged by a remarkable 440%, or RM10.0 million, compared to the corresponding quarter last year. This significant improvement was not only due to increased revenue but also lower administrative costs from a streamlined structure and reduced finance costs following the full settlement of Sukuk in July 2024.
Q1 2025 Net Profit (Continuing Ops, Attributable to Owners)
RM 7,539,000
Q1 2024 Net Profit (Continuing Ops, Attributable to Owners)
RM (6,766,000)
This translates to a 211% increase, marking a powerful shift from a loss to a profit in continuing operations. This is a clear indicator that the core businesses are performing well.
Earnings Per Share (EPS)
Reflecting the improved profitability, the basic EPS from continuing operations also saw a significant boost:
Q1 2025 Basic EPS (Continuing Ops)
1.4 sen
Q1 2024 Basic EPS (Continuing Ops)
(1.3) sen
This represents a 203% increase, underscoring the strong earnings recovery in KPS Berhad’s ongoing segments.
Discontinued Operations
It’s important to note that no contribution from discontinued operations was recorded in Q1 2025, following the completion of the Kaiserkorp disposal on 20 March 2024. This reclassification means that the current quarter’s results primarily reflect the performance of KPS Berhad’s continuing core businesses.
Segmental Performance: A Closer Look
A deeper dive into KPS Berhad’s various business segments reveals the drivers behind the overall performance:
- Manufacturing: This sector continues to be the largest contributor, with revenue increasing by 6% to RM204.1 million. This growth was primarily fueled by Toyoplas Manufacturing (Malaysia) Sdn Bhd and MDS Advance Sdn Bhd. Despite this, Century Bond Bhd and CPI (Penang) Sdn Bhd experienced revenue declines, mainly due to lower sales across most divisions. Nonetheless, the sector’s profit before tax surged by 67% to RM16.4 million, largely due to improved gross profit margins and reduced administrative costs at Toyoplas.
- Trading: The trading sector saw a slight revenue increase to RM39.4 million, mainly from higher water equipment sales, leading to an increase in profit before tax to RM2.8 million.
- Infrastructure: This segment, which includes Smartpipe Technology Sdn Bhd and share of profits from associates, posted a profit before tax of RM0.9 million, a significant improvement from a loss in the corresponding quarter last year. This was primarily driven by a higher share of profit from Perangsang Water Management Sdn Bhd.
- Investment Holding: This sector recorded a lower loss before tax of RM7.7 million, down from RM11.1 million in Q1 2024, mainly due to reduced administrative costs.
- Property Investment: As expected, no revenue was generated in this segment due to the disposal of Plaza Perangsang.
- Oil and Gas: NGC Energy Sdn Bhd reported a higher loss, with KPS Berhad’s share of loss at RM0.1 million, compared to a profit in Q1 2024. This was primarily due to lower domestic Liquefied Petroleum Gas (LPG) sales and decreased contributions from the Industrial and Commercial segments.
Financial Health and Cash Flow
Looking at the balance sheet as of 31 March 2025, KPS Berhad maintains a stable financial position. Total assets stood at RM1,552,895,000, with shareholders’ equity at RM1,093,042,000. The Net Assets Per Ordinary Share attributable to owners of the parent remained stable at RM2.03.
The cash flow statement shows a positive shift in operating activities. Net cash generated from operating activities for the three months ended 31 March 2025 was RM18,672,000, a significant improvement from a net cash *used in* operating activities of RM(1,650,000) in the same period last year. This indicates stronger operational cash generation.
Risk and Prospect Analysis: Navigating a Complex Environment
KPS Berhad acknowledges the challenging global economic environment, particularly the projected deceleration of global growth and escalating trade tensions, notably the imposition of higher U.S. tariffs. These factors are expected to impact the manufacturing sector, especially in Southeast Asia, including Malaysia, potentially straining productivity and disrupting supply chains in industries like electronics and plastics.
Challenges and Strategies:
- Manufacturing Sector: The sector faces uncertain market demand, driven by ad-hoc requirements, and intensified price competition due to low offtake from cement players and geopolitical tensions. The proposed U.S. reciprocal tariff policy raises concerns about supply chain flows and cost structures, given KPS Berhad’s substantial operations in Vietnam and China. To counter these, KPS Berhad is adopting a cautious yet adaptive approach, implementing alternative sourcing strategies, prioritizing cost management, operational efficiency, and diversifying its market presence.
- Trading Sector: The water chemicals trading segment is expected to maintain stable revenue, with new contracts secured in Q1 2025. The water meter segment is also poised for growth, supported by water authorities’ replacement programs and new development areas. This sector is not expected to be directly impacted by the U.S. tariff measures due to its primarily domestic operations. The company remains vigilant in monitoring global supply chain developments and raw material costs.
The company’s proactive strategies to streamline operations, manage costs, and diversify market presence demonstrate a commitment to safeguarding long-term performance amidst these challenges.
Dividends: Returning Value to Shareholders
On a positive note for shareholders, the Board of Directors approved and declared a single-tier final dividend of 2.0 sen per ordinary share for the financial year ended 31 December 2024. This dividend, amounting to approximately RM10.75 million, was approved by shareholders at the Annual General Meeting on 20 May 2025 and is scheduled to be paid on 18 June 2025. While this is a dividend for the previous financial year, its announcement in this report reflects KPS Berhad’s commitment to shareholder returns.
Summary and Investment Considerations
KPS Berhad’s first quarter of 2025 demonstrates a strong operational turnaround in its continuing businesses, particularly in manufacturing, which has driven a significant increase in profitability and earnings per share. The strategic adjustments, including cost streamlining and debt reduction, appear to be yielding positive results. While the global economic environment and trade tensions present ongoing challenges, especially for the manufacturing sector, the company is actively implementing mitigation strategies such as alternative sourcing and operational efficiency improvements.
The positive cash flow from operations and the commitment to shareholder returns through the declared dividend further strengthen the company’s position. However, investors should remain mindful of the external pressures and the ongoing material litigations as outlined in the report, which the company is currently defending and believes it has strong grounds to argue. The outcome of these legal proceedings, while not currently recognized as liabilities, could impact future financial positions.
- Strong Profitability Turnaround: Significant increase in PBT and net profit from continuing operations.
- Resilient Core Businesses: Manufacturing and trading sectors showing growth despite market complexities.
- Strategic Cost Management: Lower administrative and finance costs contributing to improved results.
- Global Economic Headwinds: Ongoing challenges from trade tensions and uncertain demand, particularly for manufacturing.
- Commitment to Shareholders: Final dividend declared for FY2024.
- Ongoing Litigations: Potential risks from material legal cases that are currently being defended.
Overall, KPS Berhad appears to be navigating a complex environment with strategic agility, focusing on its core strengths and operational efficiency.
What Are Your Thoughts?
KPS Berhad has shown a strong rebound in its continuing operations this quarter. Can the company maintain this growth momentum despite the global economic headwinds and intense competition in its manufacturing segment? What are your key takeaways from this report?
Share your insights and perspectives in the comments section below! Your thoughts are valuable to our community.
For more detailed analysis, you can refer to the full quarterly report on Bursa Malaysia’s website. Stay tuned for more updates on Malaysian companies!
