Navigating the Tides: A Deep Dive into the Group’s Q1 2025 Performance
Malaysia’s economic landscape continues to evolve, and with it, companies are adapting their strategies to thrive. Today, we’re dissecting the first-quarter 2025 financial report of a prominent Malaysian conglomerate, offering insights into its latest performance. While the Group reported a commendable increase in revenue, it also navigated some headwinds in profitability and operational cash flow. Let’s unpack the numbers and understand what’s driving these trends.
Key Takeaways from the Report:
- Overall Group revenue grew by 9% compared to the same period last year, reaching RM400.6 million.
- Pre-tax profit remained largely steady at RM140.0 million.
- Profit attributable to owners of the Company saw a slight improvement, up 1% to RM124.3 million.
- The Financial Services and Industries segments showed strong revenue growth, while Property and Hospitality faced challenges.
- No dividends were declared for the current quarter.
Unpacking the Core Financials: Q1 2025 vs. Q1 2024
The Group’s financial performance in the first quarter of 2025 presents a mixed picture of growth and strategic adjustments. Here’s a closer look at the key figures:
Q1 2025
Revenue: RM400,582k
Pre-tax Profit: RM140,047k
Profit Attributable to Owners: RM124,283k
Basic/Diluted Earnings Per Share (EPS): 6.03 sen
Q1 2024
Revenue: RM367,944k
Pre-tax Profit: RM140,918k
Profit Attributable to Owners: RM122,928k
Basic/Diluted Earnings Per Share (EPS): 5.96 sen
Overall, the Group’s revenue climbed by 9%, demonstrating robust top-line growth. However, pre-tax profit experienced a marginal 1% decrease, indicating some pressure on profitability. This was largely due to a 7% dip in profit from operating businesses, which stood at RM69.4 million. Conversely, profit from investing activities saw an 8% rise to RM84.4 million, significantly bolstered by contributions from RHB Bank.
Segmental Deep Dive: Where Growth and Challenges Lie
Property Segment
The Property Segment reported a decline in both revenue and pre-tax profit. Revenue fell by 8% to RM188.5 million, and pre-tax profit decreased by 15% to RM31.2 million. This was primarily attributed to lower profit margins from existing projects compared to the same period last year, which benefited from a higher-margin project completion. Despite this, the Property Investment Division continued to provide stable revenue from its leasing activities.
Industries Segment
This segment was a standout in terms of revenue growth, surging by 41% to RM120.8 million. However, pre-tax profit experienced a significant 43% drop to RM5.7 million. The main culprit for this profit decline was operating expenses from newly acquired factories in Johor Bahru under the Cable Division, which incurred a pre-tax loss of RM6.3 million. Excluding these new factory losses, the segment’s pre-tax profit would have shown an improvement, aligning with its strong revenue growth.
Hospitality Segment
The Hospitality Segment saw a slight 2% dip in revenue to RM23.4 million and an increased pre-tax loss of RM1.5 million, compared to a loss of RM0.7 million in the same period last year. The higher loss was mainly due to ongoing refurbishment work at the Swiss-Garden Beach Resort Kuantan, affecting revenue from food and beverage, as well as meetings and convention events.
Financial Services Segment
A strong performer, the Financial Services Segment recorded a 27% increase in revenue to RM67.9 million and an 18% rise in pre-tax profit to RM30.9 million. This impressive growth was driven by an expanding loan portfolio, both in Malaysia and Australia, with outstanding loans reaching RM2.4 billion by the end of the quarter, up from RM1.7 billion a year ago.
Investment Holding Segment
This segment contributed a healthy pre-tax profit of RM73.7 million, an 8% increase compared to the same period last year. The improvement was largely due to a higher profit contribution from RHB Group, reflecting the Group’s strategic investments.
Financial Health: Balance Sheet and Cash Flow
The Group’s financial position remains robust. As at 31 March 2025, total assets stood at RM11,814,887k, an increase from RM11,413,904k at the end of 2024. Total liabilities also increased to RM5,167,940k, but net assets improved to RM6,646,947k, resulting in a higher net assets per share of RM3.19 (compared to RM3.12 at 31 December 2024). The increase in borrowings to RM4,149,370k was primarily to support the expansion of capital financing businesses in Malaysia and Australia.
However, a notable shift was observed in the cash flow statement. Net cash flow from operating activities turned negative, recording a usage of RM212,617k for the three months ended 31 March 2025, a significant change from the RM102,733k generated in the same period last year. This was largely influenced by net disbursements in capital financing and changes in working capital. Investing activities also saw increased cash usage, mainly due to the purchase of land for property development. This was offset by strong net cash from financing activities, which surged to RM260,836k, primarily from new drawdowns of medium-term notes and Sukuk.
Looking Ahead: Prospects and Strategies
The Group remains optimistic about its prospects for the remainder of 2025, outlining several strategic initiatives across its segments:
- Property Development: With RM1.2 billion in unbilled sales and a substantial land bank of 2,083 acres with an estimated gross development value (GDV) of RM17.7 billion, the Property Development Division is poised to remain a key profit driver. The focus will be on project pipeline execution, construction progress, cost efficiency, and data-driven marketing to maximize take-up rates. Profits from the Melbourne BLVD Phase 2 joint venture are anticipated in early 2027.
- Industries: The Cable Division aims to boost revenue by expanding its sales and marketing teams and upgrading its Melaka factory. Operations at the newly acquired Johor Bahru factories commenced in March 2025, with production expected to ramp up. The IBS Division is set to maintain its momentum, providing a stable revenue stream.
- Financial Services: Continued growth is expected, driven by expanding loan portfolios, broader geographical reach, and new product offerings.
- Hospitality: Favorable tourism conditions in Malaysia, particularly with extended visa-free travel for Chinese and Indian passport holders, are expected to fuel growth. The completion of Phase 2 refurbishment at Swiss-Garden Beach Resort Kuantan in Q2 2025 and partnerships with international operators (DoubleTree by Hilton, Holiday Inn Express & Suites) are set to enhance performance.
The Group expresses confidence in delivering satisfactory results for the rest of 2025, leveraging its diverse business segments and strategic initiatives.
Summary and
The first quarter of 2025 showcases the Group’s ability to drive revenue growth despite a challenging operating environment impacting some segments. The robust performance of its Financial Services and Investment Holding segments, coupled with strategic expansions in Industries and a promising outlook for Hospitality, provides a solid foundation. While the Property segment faced temporary headwinds in profit margins, its substantial unbilled sales and land bank signal future potential. The shift in cash flow from operations to a net outflow, compensated by financing activities, highlights the Group’s active capital management to fuel growth initiatives, especially in its burgeoning capital financing business and land acquisitions.
However, potential investors should consider the following key points:
- The increase in impairment losses, particularly in capital financing, warrants close monitoring.
- The initial losses from newly acquired factories in the Industries segment indicate integration and operational ramp-up challenges that could impact short-term profitability.
- The negative operating cash flow, while potentially a short-term consequence of growth investments, should be assessed for its sustainability in future quarters.
- The Hospitality segment’s profitability remains sensitive to refurbishment schedules and seasonal factors.
The Group’s diversified portfolio and strategic focus on key growth areas position it to capitalize on market opportunities. However, the execution of its expansion plans and effective management of operational costs will be crucial for sustained profitability.
