Core Data Highlights: A Closer Look at Orgabio’s Performance

Orgabio’s third quarter and year-to-date results show a company actively expanding its footprint, particularly in the domestic market. Here’s a summary of the key financial figures:

Third Quarter Performance (Q3 FY2025 vs. Q3 FY2024)

Orgabio recorded a significant surge in its top-line performance for the quarter:

This represents a remarkable 24.85% increase in revenue compared to the same quarter last year. The growth was primarily fueled by higher demand for Orgabio’s new product offerings, both within Malaysia and internationally, particularly for its instant beverage manufacturing services for third-party brand owners. The local market showed particularly strong growth.

Despite this impressive revenue growth, the company’s profitability faced headwinds:

Gross profit saw a marginal decline of 0.89%. This was mainly attributed to an increase in raw material costs and higher manufacturing expenses, including direct labour costs and operational costs, which led to a higher cost of goods sold and consequently, a compression in the gross profit margin.

The impact on the bottom line was even more pronounced:

Profit before tax for the current quarter declined by 40.95%. This decrease was primarily due to an increase in computer software expenses, staff-related expenses, and an unrealised foreign exchange loss incurred during the period.

Year-to-Date Performance (9 Months FY2025 vs. 9 Months FY2024)

Looking at the cumulative nine-month period, the picture is more positive:

Revenue increased by a substantial 44.35% for the period, driven by sustained higher demand for instant beverage manufacturing services from both domestic and international customers. The local market, in particular, experienced a significant surge in demand, contributing substantially to overall revenue growth.

Gross profit for the nine months increased by 24.00%. While positive, this growth was not proportional to the revenue increase, indicating the persistent margin pressure due to higher raw material costs, increased direct labour costs, and elevated operational expenses.

Despite the margin pressures, the Group still managed to record a 17.58% increase in profit before tax for the nine-month period, largely in line with the overall increase in gross profit.

Immediate Preceding Quarter Comparison (Q3 FY2025 vs. Q2 FY2025)

Comparing the current quarter’s performance to the immediate preceding quarter (Q2 FY2025), Orgabio saw continued revenue growth but a dip in profitability:

Revenue increased by 10.24%, primarily driven by higher demand from the local market for its instant beverage premix manufacturing services. This also contributed to a higher gross profit.

However, profit before tax was 24.77% lower than the immediate preceding quarter. This was mainly due to increased staff-related costs, higher software-related expenses, and an unrealised foreign exchange loss during the quarter.

Financial Health Check: Balance Sheet and Cash Flow

Orgabio’s financial position as of 31 March 2025 shows an expansion in its asset base, reflecting ongoing investments.

• Total Assets: Increased to RM 90.41 million from RM 77.41 million as of 30 June 2024. This growth is largely driven by an increase in property, plant, and equipment, indicating capital expenditure.
• Total Equity: Grew to RM 59.22 million from RM 55.79 million, demonstrating an increase in shareholder value. Net assets per share also improved to RM 0.24 from RM 0.22.
• Total Liabilities: Rose to RM 31.19 million from RM 21.62 million, mainly due to increases in trade payables and other payables, which is common with increased business activity.
• Cash and Cash Equivalents: Decreased to RM 7.34 million from RM 13.07 million. This reduction is primarily due to significant investments in property, plant, and equipment.

From a cash flow perspective for the nine-month period, net cash generated from operating activities was RM 3.24 million, slightly lower than RM 3.80 million in the preceding year’s corresponding period. The company continued to invest heavily, with net cash used in investing activities amounting to RM 7.88 million, predominantly for the purchase of property, plant, and equipment, including the construction of a new factory.

Risks and Prospects: Navigating Growth and Challenges

Orgabio operates within a dynamic and growing market. The global instant beverage market is projected to expand significantly from USD 61.64 billion in 2023 to USD 103.75 billion by 2031, with a Compound Annual Growth Rate (CAGR) of 6.94%. Similarly, the Malaysian instant beverage premix market is expected to grow from USD 521.65 million in 2022 to USD 835.85 million by 2029, at a CAGR of 6.97%.

Strategic Outlook

Based on these promising projections, Orgabio remains optimistic about the continued growth of its instant premix beverage business. The company’s strategy includes:

• Fulfilling Secured Orders: Maintaining focus on existing commitments.
• New Opportunities: Actively pursuing new business in both domestic and overseas markets.
• Capacity Expansion: The newly completed factory, which commenced operations and obtained Halal certification from Jakim in April 2025, is a significant milestone. This facility is expected to progressively ramp up production capacity, enabling Orgabio to serve a broader client base with a more diversified product portfolio and support expansion into new markets.

Challenges on the Horizon

While the outlook is positive, Orgabio is not immune to challenges:

• Cost Pressures: Higher raw material costs, increased direct labour costs, and elevated operational expenses continue to squeeze gross profit margins.
• Operating Expenses: Rising computer software and staff-related expenses are impacting overall profitability.
• Foreign Exchange Volatility: Unrealised foreign exchange losses have contributed to the decline in profit before tax in the current quarter.
• Litigation: The company is currently involved in a material litigation case against Jinjiang Yeeka Commercial Trading Co Ltd and Yee Chin Wee for an outstanding debt of RM 422,824.18. The trial dates are set for May 2026.