KECK SENG (MALAYSIA) BERHAD: Navigating Growth and Challenges in Q1 2025
KECK SENG (MALAYSIA) BERHAD, a diversified Malaysian conglomerate, has just unveiled its financial performance for the first quarter ended 31 March 2025. This report offers a comprehensive look into the Group’s operational strengths and the various headwinds it’s currently navigating. While the Group demonstrated a notable increase in revenue, its profit before tax experienced a decline, reflecting a mixed bag of segmental performances and the impact of external factors. For shareholders, a key highlight is the announcement of a final single-tier dividend of 9 sen per share for the financial year ended 31 December 2024, payable on 3 July 2025.
Core Financial Highlights: A Mixed Performance
Let’s dive into the numbers that paint the picture for KECK SENG’s Q1 2025 performance, comparing it against the same period last year to understand the underlying trends.
Revenue Performance
Q1 2025 Revenue
RM396.17 million
Q1 2024 Revenue
RM343.42 million
The Group reported a strong revenue of RM396.17 million for the first quarter of 2025, marking a robust 15% increase compared to the RM343.42 million achieved in the first quarter of 2024. This uplift was primarily driven by a higher selling price of refined oil within the Manufacturing segment and increased sales in the Property Development division.
Profit Before Tax and Net Profit
Q1 2025 Profit Before Tax
RM53.34 million
Q1 2024 Profit Before Tax
RM62.18 million
Despite the positive revenue growth, the Group’s Profit Before Tax (PBT) for Q1 2025 stood at RM53.34 million, a 14% decrease from the RM62.18 million recorded in Q1 2024. This reduction was mainly attributed to lower refining and negative milling margins in the Manufacturing segment, reduced average room rates and occupancy at overseas hotels, and an unrealized foreign exchange loss due to the strengthening of the Malaysian Ringgit against the US Dollar.
After accounting for income tax expenses of RM10.33 million, the Profit for the Period settled at RM43.01 million, compared to RM51.92 million in the same period last year.
Earnings Per Share (EPS)
The basic earnings per share for Q1 2025 was 11.54 sen, reflecting the Group’s net profit attributable to owners of the parent, which was RM41.48 million.
Segmental Performance: A Closer Look
KECK SENG’s diverse business segments each contributed uniquely to the overall performance:
Property Development & Investment
This segment showcased strong performance, with revenue increasing to RM261.17 million in Q1 2025 from RM212.02 million in Q1 2024. Profit also saw a significant boost, primarily due to higher selling prices and improved gross margins from properties sold. The division successfully launched new phases of residential units in Bandar Baru Kangkar Pulai (BBKP) and Taman Daya (TD), with encouraging sales momentum. Investment properties like TD Point and TD Central achieved full occupancy, and additional rental income is expected from new completions in Q2 and Q3 2025.
Manufacturing
The Manufacturing segment, while contributing significantly to revenue, faced profitability challenges. Revenue for Q1 2025 was RM67.80 million (Q1 2024: RM71.91 million). The segment recorded a lower profit in Q1 2025 compared to Q1 2024, mainly due to lower refining margins and negative milling margins. The palm oil refinery continues to operate in a challenging environment marked by US tariff-related price volatility, currency fluctuations, and intense competition.
Hotel and Resort
The Hotels segment’s revenue increased to RM66.61 million in Q1 2025 from RM57.91 million in Q1 2024. However, compared to the preceding quarter (Q4 2024), revenue and profit were lower, mainly due to reduced average room rates and occupancy at the Group’s overseas hotels in New York City and Toronto. The New York market faces headwinds from declining international arrivals due to US import tariff policies, while the Hawaii hotel (DAH) is experiencing lower occupancy levels due to US federal budget cuts and tariff policies.
Plantations
The Plantation division experienced a modest decline in fresh fruit bunch (FFB) yields in Q1 2025, consistent with industry trends. However, a recovery is anticipated in the second half of the year, with full-year FFB production expected to be comparable to 2024. The Mill is also expected to receive similar FFB volumes, despite heavy rainfall. However, increasing cost headwinds from new minimum wage implementation and rising regulatory/ESG compliance costs are concerns.
Financial Health and Outlook
The Group’s financial position remains stable. Total borrowings as of 31 March 2025 stood at RM65.11 million, comprising RM5.49 million in short-term bank overdrafts and RM59.62 million in long-term secured notes payable. The effective tax rate of 19% was lower than the statutory rate, mainly due to certain non-taxable incomes.
Risks and Prospects: Navigating the Future
KECK SENG (MALAYSIA) BERHAD acknowledges a complex operating environment for 2025:
Key Challenges Identified:
- Global & Geopolitical Instability: Ongoing conflicts and shifting US policies, including increased tariffs and trade barriers, contribute to market uncertainty.
- Palm Oil Market Volatility: New US tariffs introduce price volatility in the Crude Palm Oil (CPO) market, and expanded biodiesel mandates in Malaysia and Indonesia are expected to tighten palm oil supply.
- Rising Costs: Implementation of new minimum wages and increasing regulatory, ESG, and sustainability compliance costs will impact operational expenses.
- Currency Fluctuations: Volatility in foreign exchange rates, particularly the US Dollar, can lead to unrealized gains or losses.
- Tourism Headwinds: Overseas hotel markets face challenges from declining international arrivals, US federal budget cuts, and competitive rate reductions.
Strategic Responses & Opportunities:
- Property Development Momentum: Strong sales momentum from new launches and high occupancy rates for investment properties are expected to continue driving growth.
- Hotel Adaptability: Overseas hotels are adapting strategies, focusing on domestic and leisure travel, leveraging niche markets (e.g., film/TV for NYC), optimizing rates, and implementing cost containment measures.
- Operational Stability: Despite FFB yield declines, full-year production for Plantations is expected to be comparable to 2024, indicating underlying operational stability.
- Building Enhancements: Renovations at Menara Keck Seng and Regency Tower aim to enhance rental performance and attract new tenants.
Summary and Outlook
KECK SENG (MALAYSIA) BERHAD’s Q1 2025 report paints a picture of resilience amidst a challenging global landscape. While the Group achieved commendable revenue growth, particularly driven by its Property Development segment, profitability was impacted by a combination of factors including lower margins in manufacturing, softer performance in certain hotel markets, and adverse foreign exchange movements. The dividend announcement underscores the Group’s commitment to shareholder returns from its 2024 performance.
Looking ahead, the Group faces significant external pressures ranging from geopolitical tensions and trade barriers to rising operational costs and currency volatility. However, its diversified business model, strategic initiatives in property development, and adaptive measures in the hospitality sector position it to navigate these challenges. The focus on enhancing existing assets and capturing domestic market demand in the hotel segment, alongside continued progress in property sales, will be crucial.
Key points to monitor for future performance include:
- The recovery of FFB yields in the Plantations division and the impact of CPO price volatility.
- The effectiveness of strategies to mitigate cost increases, especially minimum wage and ESG compliance.
- The performance of overseas hotels in response to evolving tourism patterns and tariff policies.
- Continued sales momentum and rental income growth from the Property Development and Investment segments.
Final Thoughts
From a professional standpoint, Keck Seng’s Q1 2025 report highlights the inherent complexities of managing a diversified conglomerate in today’s volatile economic climate. The ability of the Property division to deliver strong results provides a solid foundation, while the challenges faced by the Manufacturing and Hotel segments underscore the need for continuous adaptation and strategic agility. The Group’s proactive measures, such as renovations and targeted market strategies, suggest a committed approach to sustaining performance.
What are your thoughts on KECK SENG’s Q1 2025 performance? Do you think the company can maintain its positive momentum in property development and effectively mitigate the headwinds in its other core businesses in the coming quarters? Share your views in the comments below!
