Greetings, fellow investors and market watchers!
Today, we’re diving into the latest financial performance of TEO GUAN LEE CORPORATION BHD, a familiar name in Malaysia’s apparel wholesale and retail sector. The company has just released its unaudited results for the third quarter ended 31st March 2025, and there are some intriguing numbers to unpack. While the report showcases impressive growth, particularly driven by festive seasons, it also highlights the persistent challenges facing the retail landscape. Let’s break down the key takeaways and see what this means for TGL’s journey ahead.
The standout news? TGL recorded a remarkable 90.27% surge in profit for the period compared to the same quarter last year, reaching RM7.057 million. This substantial increase was primarily fueled by strong sales during the Chinese New Year and Hari Raya festivities, both falling within this reporting quarter.
A Deep Dive into Financial Performance
Quarterly Performance: Festive Boost
TGL’s third quarter saw a significant uplift, largely thanks to the timing of major festive seasons. Here’s how the numbers stack up against the same period last year:
Current Quarter (Q3 FY2025)
Revenue: RM62,941k
Profit Before Taxation: RM8,592k
Profit for the Period: RM7,057k
Basic Earnings Per Share: 8.20 sen
Previous Year Corresponding Quarter (Q3 FY2024)
Revenue: RM50,197k
Profit Before Taxation: RM5,113k
Profit for the Period: RM3,709k
Basic Earnings Per Share: 4.38 sen
The company’s revenue jumped by RM12.744 million, a robust 25.39% increase. This translated into a significant 68.04% rise in profit before taxation, reaching RM8.592 million. Ultimately, profit for the period soared by RM3.348 million, marking a 90.27% growth. Basic earnings per share also saw a healthy increase from 4.38 sen to 8.20 sen.
When comparing this quarter to the immediate preceding quarter (Q2 FY2025), the impact of the festive sales is even more pronounced:
Current Quarter (Q3 FY2025)
Revenue: RM62,941k
Profit Before Taxation: RM8,592k
Profit After Tax: RM7,057k
Immediate Preceding Quarter (Q2 FY2025)
Revenue: RM29,397k
Profit Before Taxation: RM2,345k
Profit After Tax: RM1,723k
Revenue more than doubled, increasing by RM33.544 million or 114%. Profit before taxation also saw an astonishing increase of RM6.247 million, a 266% surge, while profit after tax jumped by an incredible 310%.
Year-to-Date Performance: Steady Growth
Looking at the cumulative nine-month period, TGL has maintained a positive trajectory:
Year-to-Date (YTD FY2025)
Revenue: RM113,032k
Profit Before Taxation: RM11,736k
Profit for the Period: RM9,423k
Basic Earnings Per Share: 11.06 sen
Previous Year Corresponding Period (YTD FY2024)
Revenue: RM101,559k
Profit Before Taxation: RM11,465k
Profit for the Period: RM8,389k
Basic Earnings Per Share: 10.00 sen
Revenue for the nine months ended 31st March 2025 grew by 11.30% to RM113.032 million. Profit before taxation saw a modest increase of 2.36% to RM11.736 million, and profit for the period rose by 12.33% to RM9.423 million. Basic earnings per share for the cumulative period also improved from 10.00 sen to 11.06 sen.
Financial Health: Balance Sheet and Cash Flow
TGL’s balance sheet as of 31st March 2025 shows an increase in total assets to RM154.658 million, up from RM143.088 million at the end of June 2024. Total equity also saw a healthy increase to RM124.799 million, reflecting the company’s profitability.
A notable improvement is seen in the company’s operating cash flow. For the year-to-date period, TGL generated RM125k in net cash from operating activities, a significant turnaround from a net cash outflow of RM19.437 million in the same period last year. This suggests better working capital management and stronger operational efficiency. The company also saw a positive net change in cash and cash equivalents of RM601k, compared to a net decrease of RM1.099 million last year.
Total borrowings decreased to RM7.141 million from RM8.317 million, indicating a reduction in debt burden. The effective tax rate for the period was approximately 19.71%, mainly due to the availability of unused tax losses.
Segmental Performance: Apparels Lead the Way
The segmental report confirms that the Apparels division remains the primary revenue and profit driver for TGL. For the year-to-date period, the Apparels segment contributed RM111.245 million in external revenue and RM10.812 million in segment profit from operations. The Investment Holding segment also contributed positively with RM1.787 million in external revenue and RM1.017 million in segment profit. The Group’s business activities are predominantly carried out in Malaysia.
Risks and Prospects: Navigating the Headwinds
Despite the strong quarterly performance, TGL acknowledges the challenging environment for the retail business. The report highlights that persistent inflation and rising food prices could dampen consumer spending on non-essential items like apparel. This macroeconomic pressure is a key factor that could influence future demand.
However, the management remains proactive and committed to mitigating these risks. Their strategy focuses on:
- Cost Control: Implementing measures to manage and reduce operational costs.
- Optimising Efficiency: Enhancing productivity across all facets of the business.
- Streamlining Operations: Simplifying processes to minimize impact from external challenges.
These strategies aim to build resilience and ensure the company can navigate the current economic headwinds while continuing to improve its performance.
Summary and
TEO GUAN LEE CORPORATION BHD has delivered a robust third-quarter performance, driven by strong festive sales that significantly boosted revenue and profit. The substantial improvement in net cash from operating activities and a reduction in borrowings are positive indicators of financial health and operational efficiency. While the retail sector faces ongoing challenges from inflation and consumer spending pressures, TGL’s management is actively implementing strategies to control costs and optimize operations.
Looking ahead, the company’s ability to maintain its growth momentum will depend on its effectiveness in managing these external factors and executing its strategic initiatives. The focus on cost control and operational efficiency will be crucial in sustaining profitability in a competitive market.
Key points to monitor:
- The sustained impact of inflation on consumer discretionary spending.
- The effectiveness of the management’s cost control and efficiency optimization strategies.
- Future sales performance outside of major festive seasons.
Your Thoughts?
TGL’s latest report paints a picture of a company capitalizing on market opportunities while prudently addressing challenges. Do you think TGL can maintain this growth momentum in the coming quarters, especially with consumer spending potentially slowing down? What are your views on their strategies to combat inflation and optimize operations?
Share your insights in the comments section below! Let’s discuss how Malaysian retail companies like TGL are adapting to the evolving economic landscape.
Stay tuned for more updates and analyses on the Malaysian market!
