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MRCB Navigates Challenging Waters in Q1 2025, Eyes Future Growth with Strategic Wins
Malaysian Resources Corporation Berhad (MRCB), a prominent diversified Malaysian company, has just released its unaudited financial report for the first quarter ended 31 March 2025. This report offers a glimpse into the company’s performance, highlighting both the hurdles faced in its core divisions and the strategic maneuvers being undertaken to secure future growth. While revenue saw a notable decline, a significant one-off gain led to a substantial increase in net profit for the quarter, signaling a complex but potentially transformative period for MRCB.
Core Financial Highlights: A Mixed Bag
MRCB’s performance in the first quarter of 2025 presents a nuanced picture. The company reported a significant decrease in revenue and profit before tax compared to the same period last year, primarily due to lower contributions from its key Property Development & Investment and Engineering, Construction & Environment divisions. However, a strategic asset disposal provided a crucial boost to the bottom line.
Q1 2025 (3 Months Ended 31 March)
- Revenue: RM218.19 million
- Profit Before Tax (PBT): RM4.85 million
- Profit for the Financial Year (Net Profit): RM8.60 million
- Profit Attributable to Equity Holders: RM8.59 million
- Basic Earnings Per Share (EPS): 0.19 sen
Q1 2024 (3 Months Ended 31 March)
- Revenue: RM476.20 million
- Profit Before Tax (PBT): RM18.96 million
- Profit for the Financial Year (Net Profit): RM2.95 million
- Profit Attributable to Equity Holders: RM3.00 million
- Basic Earnings Per Share (EPS): 0.07 sen
While revenue declined by 54% and profit before tax by 74% year-on-year, MRCB’s net profit saw an impressive 191% surge, largely driven by a RM22.6 million gain from the disposal of a 70% equity interest in CSB Development Sdn Bhd.
Deep Dive into Divisional Performance
The report provides a detailed breakdown of how each business segment contributed to the overall results:
Property Development & Investment Division
This division faced headwinds, with revenue declining by 53% to RM46.00 million (Q1 2024: RM98.11 million) and recording an operating loss of RM4.30 million (Q1 2024: RM11.24 million profit). This was attributed to lower contributions from the sale of completed unsold units and the fact that new property development projects are still in their initial phases, yielding minimal revenue recognition. Key contributors included sales from Sentral Suites, VIVO 9 Seputeh, TRIA 9 Seputeh, Alstonia, and the ongoing Residensi Tujuh project. The Group’s investment in Sentral REIT and Sentral REIT Management Sdn Bhd (SRM) contributed a combined profit after tax of RM3.8 million, slightly down from RM4.0 million in the previous year.
Engineering, Construction & Environment Division
This division also saw a significant dip, with revenue decreasing by 58% to RM152.69 million (Q1 2024: RM360.31 million) and operating profit falling by 55% to RM7.92 million (Q1 2024: RM17.76 million). The primary reason for this decline is the nearing completion of the LRT3 project, which had reached 99% physical and 97% financial progress as of 31 March 2025. While a new RM2.47 billion contract for LRT3 reinstatement works was awarded in February 2025, its revenue contribution remains minimal as construction is in its very early stages. Ongoing projects like Muara Sg Pahang Phase 3 and Sg Langat Phase 2 flood mitigation projects provided some revenue.
Facilities Management & Parking, and Other Segments
The Facilities Management & Parking division reported a slight increase in revenue to RM15.00 million (Q1 2024: RM13.30 million) but its operating profit decreased to RM1.68 million (Q1 2024: RM3.76 million). The “Others” segment, however, saw a substantial increase in operating profit to RM24.59 million (Q1 2024: RM8.13 million), largely due to the RM22.6 million gain from the disposal of CSB Development Sdn Bhd.
Financial Health and Cash Flow
Looking at the balance sheet, MRCB maintained a stable financial position. Total assets slightly decreased to RM8.95 billion as of 31 March 2025 (compared to RM9.03 billion as of 31 December 2024), while total equity saw a marginal increase to RM4.63 billion (from RM4.62 billion). Net assets per share improved slightly to 103.46 sen (from 103.29 sen).
The Group’s total borrowings increased to RM2.13 billion as of 31 March 2025, up from RM1.84 billion a year ago. This increase of RM296.0 million was mainly due to new drawdowns of project financing in line with the progress of the Group’s projects. Consequently, the net gearing ratio increased to 0.27 times (from 0.20 times as of 31 March 2024).
From a cash flow perspective, MRCB’s net cash used in operating activities significantly improved, decreasing to RM32.25 million (Q1 2024: RM178.76 million). However, net cash used in financing activities turned negative at RM158.09 million (Q1 2024: RM13.67 million generated), leading to a larger net decrease in cash and cash equivalents for the quarter.
Future Prospects: Strategic Pipeline and New Wins
Despite the current quarter’s revenue challenges, MRCB has a robust pipeline of projects and strategic initiatives that bode well for its future prospects:
Property Development & Investment Outlook
- Sales Performance: Achieved RM99.5 million in property sales in Q1 2025 from completed and ongoing developments.
- Ongoing Projects: Key projects like VISTA in Gold Coast, Australia (RM1.5 billion GDV, 63% units sold, 45% GDV sold) and Residensi Tujuh in Kwasa Sentral (RM385 million GDV, 28% GDV sold) are progressing. Revenue from VISTA will only be recognized upon full construction and financial settlement.
- Upcoming Launches: MRCB has earmarked RM3.5 billion worth of launches for 2025, including RM1.5 billion in Malaysia (KL Sentral, Bukit Jalil Sentral, PJ Sentral Tower 5), RM1.5 billion in New Zealand (The Symphony Centre launched in March 2025), and RM0.5 billion in Australia (MARIS and Bledisloe House).
- Strategic Landbank: The Group holds 1,156 acres of land with a potential Gross Development Value (GDV) of RM33 billion, ensuring a sustainable supply for future projects.
- Unbilled Sales: Totaled RM753.6 million as of 31 March 2025, primarily from VISTA (RM674.4 million), which will be recognized later.
- Strategic Initiatives: Signed an MOA for Ipoh Sentral (RM6.25 billion GDV), entered a joint venture for a RM520 million specialist hospital in Melaka, and acquired seven parcels of land in Cyberjaya for RM287.7 million to support future growth.
Engineering, Construction & Environment Outlook
- Significant Contract Wins: A major boost came from the RM2.47 billion LRT3 reinstatement contract in February 2025. Post-quarter, MRCB secured the RM2.9 billion Kompleks Sukan Shah Alam (KSSA) contract in mid-May 2025 and a RM160.1 million PLUS highway additional lane project. These bring the total construction wins for 2025 to RM5.6 billion.
- Ongoing Projects: The RM250 million Sungai Langat Phase 2 and RM380 million Muara Sungai Pahang Phase 3 flood mitigation projects continue to contribute.
- Future Opportunities: Negotiations are ongoing for the proposed redevelopment of the Kuala Lumpur Sentral Station. The division is also targeting climate change adaptation projects and holds a tender book of RM1.7 billion for various infrastructure upgrades.
Dividend Announcement
MRCB announced a first and final single tier dividend of 1.00 sen per ordinary share for the financial year ended 31 December 2024, amounting to RM44.68 million, which was paid on 20 May 2025. No dividend was declared or paid for the current financial quarter under review.
Summary and
MRCB’s first quarter of 2025 reflects a period of transition. While core operational revenue saw a decline due to the maturity of major projects and early stages of new ones, the strategic disposal of CSB Development Sdn Bhd provided a significant boost to net profit, demonstrating agile asset management. The increase in borrowings and gearing is a natural consequence of funding new, large-scale projects, which are expected to drive future revenue. The company has successfully secured substantial new construction contracts totaling RM5.6 billion year-to-date and has a robust pipeline of property launches both domestically and internationally, indicating a strong commitment to long-term growth.
Key points to consider:
- The decline in Q1 2025 revenue and PBT is largely attributable to the winding down of the LRT3 project and the initial phases of new property developments, which is a temporary phase.
- The significant increase in net profit and EPS was primarily driven by a one-off gain from asset disposal, which highlights prudent financial management but may not be reflective of recurring operational performance.
- MRCB’s strategic focus on monetizing unsold completed property stock and launching new developments in 2025 is critical for future cash flow and revenue generation.
- The substantial new contract wins in the Engineering, Construction & Environment division, particularly the KSSA and LRT3 reinstatement projects, provide a strong order book and underpin future earnings stability.
- The Group’s extensive land bank and diversified project pipeline across Malaysia, Australia, and New Zealand position it for sustainable long-term growth in both property and infrastructure sectors.
As MRCB continues to execute its long-term strategy, investors might want to observe how these new projects translate into tangible revenue and profit contributions in the coming quarters. The company’s ability to convert its substantial unbilled sales, particularly from overseas projects like VISTA, into recognized revenue will be a key factor to watch.
What are your thoughts on MRCB’s strategic direction and its ability to capitalize on these new project wins? Do you believe the company can successfully navigate the current transitional period and deliver sustained growth in the coming years?
Share your insights in the comments section below!
For more detailed analyses of Malaysian corporate reports, check out our other articles.
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