MGB Berhad’s Q1 2025 Report: Navigating Growth Amidst Shifting Tides
Greetings, fellow investors and market enthusiasts! Today, we’re diving into the latest financial report from MGB Berhad (MGB), a prominent player in Malaysia’s construction and property development landscape. Their First Quarter (Q1) 2025 results offer a fascinating glimpse into a company balancing domestic commitments with ambitious international expansion. While MGB successfully grew its top line, its profitability faced some headwinds this quarter. Let’s break down the numbers and what they mean for the company’s journey ahead.
Core Data Highlights: A Mixed Performance
MGB Berhad recorded a notable increase in revenue for Q1 2025 compared to the same period last year, signaling continued business activity. However, this growth in sales did not translate to higher profits, with both profit before tax and profit after tax seeing a decline.
Overall Financial Performance (Q1 2025 vs Q1 2024)
Q1 2025
Revenue: RM227.67 million
Profit Before Tax (PBT): RM17.05 million
Profit After Tax (PAT): RM12.03 million
Basic Earnings Per Share (EPS): 2.01 sen
Q1 2024
Revenue: RM217.88 million
Profit Before Tax (PBT): RM20.59 million
Profit After Tax (PAT): RM15.11 million
Basic Earnings Per Share (EPS): 2.40 sen
This translates to a 4.49% increase in revenue. However, PBT saw a 17.21% decline, and PAT decreased by 20.39%. Consequently, Basic Earnings Per Share also dropped by 16.25%. The report attributes the dip in profitability mainly to increased administrative expenses and costs incurred by their overseas subsidiary.
Quarter-on-Quarter Snapshot (Q1 2025 vs Q4 2024)
Comparing the current quarter to the immediate preceding quarter (Q4 2024), MGB’s revenue decreased by 11.36%, from RM256.84 million to RM227.67 million. PBT also fell by 26.52%, and PAT by 16.91%. This sequential decline was primarily due to the completion of certain projects like Idaman BSP and other projects nearing completion, leading to minimal progress recognition in the construction segment.
Segmental Performance: A Tale of Two Divisions
A deeper look into MGB’s business units reveals varied performances:
| Segment | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Revenue Change | Q1 2025 PBT/(LBT) (RM’000) | Q1 2024 PBT/(LBT) (RM’000) | Profit Change |
|---|---|---|---|---|---|---|
| Construction & Trading | 113,510 | 130,298 | ↓ RM16.79M | (2,114) (LBT) | 5,535 (PBT) | ↓ RM7.65M |
| Property Development | 114,161 | 87,585 | ↑ RM26.58M | 20,009 | 15,450 | ↑ RM4.56M |
| Others | – | – | – | (850) (LBT) | (396) (LBT) | ↓ RM0.45M |
The Construction and Trading segment experienced a revenue decrease, largely because the Kita Sejati project is nearing completion with minimal progress. This segment also turned from a profit before tax to a loss before tax, impacted by higher administrative costs and expenses from the overseas subsidiary. Interestingly, this segment also includes manufacturing of Industrialised Building System (IBS) precast products, contributing RM8.56 million internally and RM2.26 million in overseas sales. The report hints that this manufacturing arm might become a separate reportable segment in the future.
Conversely, the Property Development segment showed remarkable growth, with revenue increasing significantly and profit before tax improving by RM4.56 million. This strong performance was primarily driven by increased progress in ongoing development projects like Idaman Cahaya Phase 2 and Idaman Sari.
The ‘Others’ segment, which includes investment holding activities, saw its loss before tax widen.
Financial Health and Cash Flow
As of March 31, 2025, MGB’s total assets stood at RM1.10 billion, with total liabilities at RM496.23 million. The net assets per share remained stable at RM1.02. A point to note is the significant increase in cash used in operating activities, which rose from RM21.86 million in Q1 2024 to RM75.87 million in Q1 2025. This indicates a higher outflow of cash to fund day-to-day operations and working capital needs during the period.
In terms of shareholder returns, MGB paid out a first interim single-tier dividend of RM0.0152 per ordinary share on March 28, 2025, for the financial year ended 31 December 2024, totaling RM8.993 million.
Strategic Outlook: Building for the Future
Despite the mixed Q1 results, MGB Berhad remains steadfast in its strategic direction, focusing on key growth drivers and operational efficiencies.
Commitment to Affordable Housing and Innovation
MGB continues its strong commitment to the construction of affordable homes and industrial developments in Malaysia. To enhance its competitive edge, the Group is intensifying efforts in technological advancements, particularly through the comprehensive digitalization of its processes. The innovative use of Industrialised Building Systems (IBS) is central to their strategy, aiming to reduce construction timelines, cut overhead costs, and enhance quality through pre-fabricated concrete products.
Furthermore, MGB plans to integrate the VadTech methodology for operational optimizations wherever feasible. This dual approach of IBS and VadTech is set to bolster MGB’s position as a leader in innovative and sustainable construction, directly supporting the Selangor state government’s goal of constructing 30,000 affordable homes by 2025.
Ambitious International Expansion
On the international front, MGB’s wholly-owned subsidiary, MGB International for Industry (MGBI), is making significant strides in the Kingdom of Saudi Arabia (KSA) through a joint venture with SANY Alameriah Industrial. This strategic entry into the KSA market has already yielded substantial results, with MGBI securing contracts valued over RM207 million for the supply and installation of precast elements for approximately 726 residential units in Jeddah. These contracts are well-aligned with KSA’s Vision 2030, which aims to increase homeownership to 70% by 2030, necessitating a massive annual construction of 115,000 new homes. MGB’s expanding presence positions it well to contribute to this national agenda.
Solid Order Book and Future Prospects
MGB is backed by a robust existing order book of approximately RM1.20 billion from its construction segment and unbilled sales of RM0.60 billion from ongoing property development projects. This strong pipeline provides a solid foundation for future revenue recognition. Given these factors, the Group expresses optimism for a satisfactory performance in 2025.
Summary and
MGB Berhad’s Q1 2025 report presents a picture of a company actively pursuing growth and efficiency. While revenue growth is a positive sign, the decline in profitability and increased operating cash outflow are areas that warrant close monitoring. The Group’s strategic focus on affordable housing, coupled with technological adoption like IBS and VadTech, and its promising international ventures in Saudi Arabia, highlight its forward-looking approach.
The existing order book and unbilled sales provide a degree of stability and visibility into future earnings. However, investors should be mindful of the following key points:
- Declining Profitability: Despite revenue growth, profit before tax and profit after tax decreased, primarily due to increased administrative expenses and costs from overseas subsidiaries.
- Project Cyclicality Impact: The construction segment’s revenue and profitability were affected by projects nearing completion, underscoring the importance of securing new projects to maintain momentum.
- Increased Operating Cash Outflow: A significant rise in cash used in operating activities could impact the company’s liquidity if not effectively managed over the long term.
- Higher Effective Tax Rate: The effective tax rate was higher than the statutory rate, mainly due to losses in certain subsidiaries that could not be offset against taxable profits and non-tax deductible expenses.
- Dependencies on Uncompleted Corporate Proposals: Several announced joint venture agreements and collaborations are still pending completion, which could influence future growth and operational plans.
MGB is clearly positioning itself for long-term growth through strategic initiatives and international expansion. How these strategies will translate into sustained profitability in the coming quarters will be crucial to watch.
From a professional standpoint, MGB’s narrative in Q1 2025 is one of strategic evolution. The domestic market continues to be their bread and butter, but the bold move into KSA signifies a calculated step towards diversifying revenue streams and tapping into a high-growth region. The short-term profit squeeze is a concern, but it could be a temporary phase as they absorb initial costs for these strategic shifts and new market entries. The key will be how quickly their new projects and international ventures start contributing meaningfully to the bottom line.
What are your thoughts on MGB’s strategy to balance domestic affordable housing projects with its ambitious international expansion? Share your insights in the comments below!
