Greetings, fellow investors and market enthusiasts! Today, we delve into the latest financial report from Cepatwawasan Group Berhad for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into the company’s performance, revealing a dynamic interplay of market forces, operational shifts, and strategic resilience.

While the Group experienced a slight dip in revenue, a remarkable surge in profitability highlights their ability to adapt and thrive amidst fluctuating commodity prices and operational hurdles. Notably, the company also recently announced a generous dividend payout, signaling confidence in their financial standing and commitment to shareholder returns. Let’s unwrap the details and see what truly shaped Cepatwawasan’s quarter!

Diving Deeper: Segmental Performance Breakdown

A closer look at Cepatwawasan’s individual business segments reveals a mixed but overall positive picture, showcasing the diversified nature of their operations.

Plantation Segment: A Strong Harvest

The Plantation segment truly shone this quarter, demonstrating robust growth despite a slight dip in Fresh Fruit Bunch (FFB) production. This was a testament to improved market conditions and enhanced pricing power for their produce.

Revenue for the Plantation segment surged by 23%, and segment profit soared by an impressive 88%. While FFB production saw a marginal 1% decline, the average FFB selling price jumped by 11%, significantly boosting profitability. The FFB yield per hectare also improved by 10%, indicating better efficiency.

Oil Mill Segment: Facing Headwinds

The Oil Mill segment faced a challenging quarter, impacted by lower throughput and reduced operational efficiency. Intense competition for FFB supplies and unfavorable weather conditions in the Sandakan region led to a reduction in crop availability and lower mill extraction rates.

Revenue for the Oil Mill segment decreased by 9%, resulting in a loss of RM2.35 million, a significant negative variance compared to the profit in Q1 2024. FFB processed and CPO production both saw substantial declines of 22% and 26% respectively, exacerbated by a 1% drop in CPO extraction rate. Despite a 22% increase in average CPO price, the operational challenges weighed heavily on this segment.

Power Plant Segment: Energizing Growth

The Renewable Power Division delivered strong results, showcasing improved efficiency and profitability across both its Biogas and Biomass plants. While the Biomass Plant experienced a slight decline in power exports due to boiler issues, its non-power-generating activities bolstered segment profit.

The Power Plant segment’s revenue increased by 18%, and its segment profit surged by an impressive 356%. This strong performance was primarily driven by improved conversion efficiency at the Biogas Plant, which boosted power exports by 16% despite lower feedstock. The Biomass Plant’s profit growth, even with a 14% decline in power exports, highlights the success of its diversified activities.

Quarter-on-Quarter Comparison: Q1 2025 vs Q4 2024

Comparing the current quarter with the immediate preceding quarter (Q4 2024) provides additional insights into the Group’s short-term performance trajectory.

The Group’s PBT for Q1 2025 saw a significant 67% decline compared to the immediate preceding quarter. This was largely due to a 35% reduction in FFB production, coupled with lower operational efficiency at the oil mill and margin compression from reduced oil extraction rates. While the Power Plant segment returned to profitability (RM2.05 million profit in Q1 2025 vs. RM0.98 million loss in Q4 2024), its positive contribution was not enough to offset the sharp decline from the Plantation and Oil Mill operations.

Financial Health: Balance Sheet and Cash Flow

Cepatwawasan’s financial position as at 31 March 2025 shows a healthy balance sheet with notable improvements in liabilities management.

The Group’s total liabilities saw a significant reduction of 28.4% compared to the end of 2024, contributing to a slight increase in net assets per share. This indicates a stronger financial footing.

From a cash flow perspective, Cepatwawasan delivered a strong performance. Net cash from operating activities improved significantly, moving from a deficit of RM30,000 in Q1 2024 to a positive inflow of RM3.76 million in Q1 2025. This turnaround is a positive indicator of the company’s ability to generate cash from its core operations.

Risks and Prospects: Charting the Future

Cepatwawasan Group Berhad has started 2025 on a positive note, with Crude Palm Oil (CPO) prices averaging as high as RM4,600 per tonne. The company is actively pursuing strategic initiatives to bolster future earnings, including the commissioning of a new biomass boiler and turbine in Q3 2025, alongside plans for refurbishing existing infrastructure. These upgrades are expected to significantly enhance the Biomass plant’s operational performance.

However, the Group acknowledges the challenges ahead. Rising production costs, driven by an increase in the national minimum wage and potential La Niña conditions, are a concern. Furthermore, ongoing geopolitical uncertainties and recently imposed U.S. trade tariffs have introduced heightened volatility into global commodity markets, which could impact CPO prices and demand.

Despite these potential headwinds, Cepatwawasan remains committed to delivering shareholder value through a multi-pronged strategy:

• Enhancing cost-saving initiatives across all operational segments.
• Improving FFB yield per hectare through mechanisation, process optimisation, and strategic replanting.
• Expanding non-core business activities through continuous innovation, research, and development.