REX Industry Bhd: A Tale of Two Quarters – Strong Cumulative Turnaround Amidst Q3 Headwinds
Greetings, fellow investors! Today, we’re diving into the latest financial report from REX Industry Bhd for the third quarter ended 31 March 2025. This report presents a fascinating dichotomy: a commendable turnaround in cumulative performance for the nine-month period, contrasted with a challenging individual quarter. The company has demonstrated resilience, but also faced specific headwinds that impacted its most recent three months. Let’s unwrap the numbers and see what’s truly shaping REX Industry’s journey.
Key Takeaway: While the third quarter saw a dip in revenue and a widened loss due to one-off provisions, REX Industry Bhd has achieved a significant profit turnaround for the nine-month period. Moreover, strategic asset disposal has substantially boosted the company’s cash reserves, positioning it more robustly for future challenges.
Core Data Highlights: Navigating the Financial Landscape
Overall Financial Performance: A Mixed Bag
Looking at the bigger picture, REX Industry Bhd has shown a remarkable recovery for the cumulative nine-month period ended 31 March 2025. The group managed to swing from a loss to a healthy profit, showcasing a strong rebound from the previous year.
9 Months Ended 31 March 2025
Revenue: RM104,081 thousand
Profit Before Tax: RM8,772 thousand
Net Profit: RM8,576 thousand
Earnings Per Share: 1.30 sen
9 Months Ended 31 March 2024
Revenue: RM102,499 thousand
Loss Before Tax: RM(1,956) thousand
Net Loss: RM(1,922) thousand
Loss Per Share: (0.29) sen
This represents a 2% increase in revenue for the nine-month period, but more impressively, a significant turnaround from a pre-tax loss of RM1.96 million to a pre-tax profit of RM8.77 million. Similarly, net profit shifted from a loss of RM1.92 million to a profit of RM8.58 million, translating to a positive earnings per share of 1.30 sen.
However, the individual third quarter paints a different picture. The group experienced a decline in revenue and reported a wider loss compared to the same period last year:
Quarter Ended 31 March 2025
Revenue: RM31,434 thousand
Loss Before Tax: RM(2,450) thousand
Net Loss: RM(2,652) thousand
Loss Per Share: (0.40) sen
Quarter Ended 31 March 2024
Revenue: RM35,603 thousand
Loss Before Tax: RM(519) thousand
Net Loss: RM(492) thousand
Loss Per Share: (0.07) sen
Revenue for the quarter decreased by 11.7%, primarily due to lower demand from Malaysia’s domestic market. The widened loss before tax, from RM0.52 million to RM2.45 million, was mainly attributed to one-off provisions for allowance for obsolete and slow-moving inventories and impairment loss on trade receivables. It’s worth noting that, despite the loss, the current quarter’s loss before tax of RM2.5 million is an improvement compared to the immediate preceding quarter’s loss of RM2.9 million, thanks to improved profit margins from the Indonesian subsidiary.
Strengthening the Balance Sheet: A Cash Infusion
REX Industry Bhd’s financial position as at 31 March 2025 shows a notable improvement in its liquidity, largely driven by strategic asset disposals.
| Balance Sheet Item | As at 31 March 2025 (RM’000) | As at 30 June 2024 (RM’000) |
|---|---|---|
| Total Assets | 158,007 | 155,826 |
| Total Equity | 102,260 | 96,361 |
| Net Assets Per Share (RM) | 0.16 | 0.15 |
| Cash and Cash Equivalents | 42,959 | 9,233 |
| Total Liabilities | 55,747 | 59,465 |
The most striking change is the surge in cash and cash equivalents, which jumped from RM9.23 million to RM42.96 million. This significant increase is a direct result of the successful disposal of land and buildings for RM41.80 million, completed in September 2024. This move has not only bolstered the company’s cash reserves but also contributed to a slight increase in total assets and equity, alongside a reduction in total liabilities.
Cash Flow Dynamics: Strategic Moves
The cash flow statement for the nine-month period highlights the impact of the asset disposal and operational shifts.
9 Months Ended 31 March 2025
Net Cash Used in Operating Activities: RM(15,971) thousand
Net Cash From Investing Activities: RM46,978 thousand
Net Cash From Financing Activities: RM2,176 thousand
Net Increase in Cash: RM33,183 thousand
9 Months Ended 31 March 2024
Net Cash From Operating Activities: RM3,114 thousand
Net Cash Used in Investing Activities: RM(2,315) thousand
Net Cash Used in Financing Activities: RM(6,369) thousand
Net Decrease in Cash: RM(5,570) thousand
While the group saw a net cash outflow from operating activities of RM15.97 million (compared to an inflow in the prior period), this was more than offset by a substantial cash inflow of RM46.98 million from investing activities. This large inflow is primarily due to the proceeds from the aforementioned asset disposal. The funds from this disposal have been strategically utilized for repayment of bank borrowings and working capital, further strengthening the company’s financial footing. Overall, the company ended the period with a healthy net increase in cash and cash equivalents.
Risk and Prospect Analysis: Navigating the Headwinds
REX Industry Bhd acknowledges that the operating environment remains challenging. The group anticipates continued pressure from several external factors:
- Increasing raw material prices, which directly impact production costs.
- Ongoing foreign exchange fluctuations, creating uncertainty in international trade.
- An uncertain global economic outlook, exacerbated by factors like USA-imposed tariffs.
- Softer trade and consumer sentiment, potentially affecting demand in key markets.
- Persistent inflationary headwinds, eroding purchasing power and increasing operational expenses.
These challenges are expected to weigh on the group’s earnings and overall results. However, the company is not standing still. REX Industry Bhd is actively focusing on enhancing its performance through a multi-pronged strategy:
- Investing in Brands and People: Strengthening its core assets and human capital.
- Improving Margins from Product Mix: Optimizing its product offerings to achieve better profitability.
- Driving Operational Efficiencies: Streamlining processes to reduce costs and improve productivity.
These strategic initiatives are crucial for supporting the group’s business growth and mitigating the impact of external pressures. The successful asset disposal also provides a significant financial buffer, allowing the company more flexibility to execute these plans.
Summary and
REX Industry Bhd’s latest quarterly report paints a picture of a company actively adapting to a challenging economic landscape. While the third quarter’s individual performance was impacted by specific, one-off provisions and softer domestic demand, the cumulative nine-month results demonstrate a strong underlying recovery and a successful shift from loss to profit. The strategic disposal of assets has significantly bolstered the company’s cash position and reduced its overall liabilities, providing a crucial financial cushion to navigate the persistent market headwinds.
The company is clearly aware of the external pressures it faces, from rising costs to global economic uncertainties. Its proactive measures, focusing on internal efficiencies, brand investment, and product mix optimization, are commendable steps towards sustainable growth. The financial strengthening via asset disposal provides the necessary liquidity to execute these strategies effectively.
Key risk points to monitor for REX Industry Bhd include:
- Continued pressure from increasing raw material prices.
- Volatility in foreign exchange rates affecting international operations.
- Potential impacts from the uncertain global economic outlook and trade tariffs.
- Sustained softness in trade and consumer sentiment, especially in the domestic market.
- The ongoing challenge of persistent inflationary pressures across its cost base.
From a professional standpoint, REX Industry Bhd’s strategic asset disposal has significantly bolstered its cash position and reduced debt, providing a strong financial cushion to navigate current market headwinds. While Q3 results were impacted by one-off provisions and domestic demand, the 9M cumulative performance shows a commendable turnaround, indicating underlying resilience and effective cost management in other areas, particularly from the Indonesian subsidiary.
What are your thoughts on REX Industry Bhd’s strategy to bolster its cash reserves through asset disposal, and do you believe this will sufficiently shield them from the ongoing market headwinds? Share your views in the comment section below!
