Widad Group’s Q1 2025 Turnaround: A Deeper Dive into Their Latest Financials
Widad Group Berhad has just released its unaudited interim financial report for the first quarter ended 31 March 2025. This report offers a compelling look at the company’s performance, revealing a significant shift from a loss-making position to profitability. As Malaysian retail investors, understanding these numbers is crucial to gauge the company’s trajectory amidst evolving market dynamics.
The core message from this quarter’s report is clear: Widad Group is demonstrating a strong recovery, driven by robust construction activities and diligent cost management. However, like many in the industry, it’s navigating the complexities of rising operational costs. Let’s break down the key figures and strategic moves that define this period.
Core Data Highlights: A Quarter of Significant Shifts
Widad Group’s Q1 2025 results showcase an impressive rebound, especially when compared to the same period last year. The company’s focus on operational efficiency and strategic financial management appears to be paying off.
Revenue & Profitability Surge
The most striking aspect of this report is the substantial increase in revenue and the return to profitability. This turnaround is largely attributed to accelerated progress in construction works.
Q1 2025 Revenue:
RM62.06 million
Q1 2024 Revenue:
RM29.74 million
This represents an impressive 108.69% increase in revenue compared to the same quarter last year.
The positive momentum extends to the bottom line:
Q1 2025 Profit Before Tax (PBT):
RM2.27 million
Q1 2024 Loss Before Tax (LBT):
(RM2.68 million)
Q1 2025 Profit After Tax (PAT):
RM1.22 million
Q1 2024 Loss After Tax (LAT):
(RM4.31 million)
This remarkable shift from a loss to a profit position is a testament to higher gross profit, significant reduction in administrative expenses through cost-cutting, and lower borrowing costs due to reduced borrowings.
Gross Profit Margin Under Pressure
While revenue and overall profit saw significant improvements, the gross profit margin experienced a slight compression:
Q1 2025 Gross Profit Margin:
10.49%
Q1 2024 Gross Profit Margin:
13.94%
The report attributes this reduction primarily to the rising cost of raw materials and labor costs. This highlights an industry-wide challenge that Widad Group, like many others, is actively managing.
Earnings Per Share (EPS) Reflects Turnaround
The improved profitability is directly reflected in the company’s earnings per share:
Q1 2025 Basic EPS:
0.04 sen
Q1 2024 Basic EPS:
(0.14 sen)
Moving into positive EPS is a strong indicator of financial recovery and improved shareholder value.
Quarter-on-Quarter Performance (Q1 2025 vs Q4 2024)
Comparing the latest quarter to the immediate preceding one, Widad Group maintained its revenue momentum, with Q1 2025 revenue of RM62.06 million being 3.28% higher than Q4 2024’s RM60.09 million. This indicates sustained high activity in construction. The company also transitioned from a loss to a profit in Q1 2025 compared to Q4 2024, driven by lower administrative and borrowing costs, and the absence of impairment loss on financial assets.
Business Unit Performance: Construction Leads the Way
Widad Group’s revenue streams primarily come from its Construction and Facility Management segments. For the current quarter, the Construction segment was the dominant contributor, generating RM54.12 million in revenue, while Facility Management contributed RM7.94 million. The report explicitly states that the higher revenue was “attributable to higher construction works progress,” underscoring the segment’s vital role in the group’s performance.
Financial Health: Managing Debt and Cash
A look at the balance sheet provides insights into Widad Group’s financial position. Total assets stood at RM1,020.96 million as of 31 March 2025, a slight decrease from RM1,038.65 million at the end of 2024. However, total liabilities saw a more notable reduction, falling from RM606.64 million to RM587.73 million, largely due to a decrease in non-current borrowings.
The company’s borrowings over total assets stood at 38.91%, indicating a manageable debt level relative to its asset base. It’s worth noting that the Group paid RM25 million for its third Sukuk Wakalah annual principal payment during the quarter, reflecting active debt management.
From a cash flow perspective, Widad Group generated RM17.34 million from operating activities in Q1 2025. This positive operational cash flow is crucial for sustaining its business and funding future growth initiatives.
Risks and Prospects: Building on a Solid Foundation
The outlook for Widad Group appears positive, buoyed by a favorable industry environment and a robust order book. The construction industry in Malaysia is projected to expand by 9.4% in 2025, providing a strong tailwind for the Group’s core business.
With an existing order book amounting to RM1.30 billion, the Group is optimistic about maintaining profitability for the rest of financial year 2025. Their strategy revolves around actively increasing their order book through tenders from both public and private sectors, coupled with continuous efforts in operational excellence and cost-cutting measures. This proactive approach is essential for navigating the rising costs of raw materials and labor, which have impacted gross profit margins.
Strategic Corporate Proposals
Widad Group is also actively pursuing several corporate proposals that could reshape its future:
- Proposed Private Placement: The Group has received an extension until 19 September 2025 to complete the implementation. This initiative aims to raise capital, with 24.7 million shares already issued and efforts underway to secure investors for the remaining 284.95 million placement shares.
- Proposed Acquisition of Land: A conditional Sale and Purchase Agreement was signed on 17 April 2025 to acquire four parcels of industrial land for RM31.30 million. This will be satisfied entirely via the issuance of 993.65 million new Widad shares. This acquisition is a strategic move to facilitate the company’s proposed diversification.
- Proposed Diversification into Property Development: This new venture signifies a strategic expansion beyond its traditional construction and facility management businesses, potentially opening new revenue streams and growth avenues.
- Proposed Share Consolidation: A consolidation of every 10 existing shares into 1 share is also proposed. This move typically aims to improve market perception of the share price and potentially enhance liquidity.
These proposals, taken together, indicate a proactive management team keen on strengthening the company’s financial position, diversifying its business portfolio, and enhancing shareholder value.
Summary and
Widad Group’s Q1 2025 report paints a picture of a company in recovery, having successfully transitioned from a loss to a profit. The significant revenue growth, driven by strong construction activities, and effective cost management strategies are key highlights. While rising operational costs present ongoing challenges, the company’s robust order book and strategic corporate proposals – including a private placement, land acquisition, and diversification into property development – position it for potential future growth.
The management’s optimism about remaining profitable for the financial year 2025 appears to be well-founded, given the positive industry outlook and their proactive efforts to expand their order book and enhance operational efficiency.
However, potential investors should consider the following key points:
- Cost Pressures: The impact of rising raw material and labor costs on gross profit margins remains a factor to monitor.
- Execution of Corporate Proposals: The successful completion and integration of the proposed private placement, land acquisition, diversification into property development, and share consolidation are crucial for their intended benefits to materialise.
- Market Competition: The construction and property development sectors are competitive, requiring continuous innovation and efficient project delivery.
Overall, Widad Group’s latest financial report reflects a positive shift in performance and a clear strategic direction for future expansion.
What’s Your Take?
Widad Group has certainly shown a commendable turnaround in Q1 2025, underpinned by strategic initiatives. Do you think the company can sustain this growth momentum and successfully execute its diversification plans in the coming years? Share your thoughts and insights in the comments section below!
