KOBAY TECHNOLOGY BHD. Navigates a Mixed Quarter: Q3 FY2025 Insights
Greetings, fellow investors! Today, we’re diving into the latest financial performance of KOBAY TECHNOLOGY BHD. (Co. No. 199401022600 (308279-A)), as revealed in their unaudited condensed consolidated report for the third quarter ended 31 March 2025. This report offers a snapshot of the company’s journey, highlighting both areas of strength and challenges in the current economic landscape. While the quarter saw a dip in profitability, the year-to-date figures present a more nuanced picture of resilience and strategic positioning. Let’s break down the key takeaways to understand KOBAY’s trajectory.
Q3 FY2025 Performance Overview: A Closer Look at the Quarter
KOBAY’s third quarter for FY2025 showed a notable shift in profitability compared to the same period last year. While revenue experienced a slight contraction, the primary impact on the bottom line stemmed from increased costs and expenses.
Q3 FY2025 (Unaudited)
Revenue: RM 81,436,000
Gross Profit: RM 17,380,000
Profit Before Tax: RM 247,000
Net Loss for the Period: (RM 1,792,000)
Basic Earnings Per Share: 0.22 sen
Q3 FY2024 (Unaudited)
Revenue: RM 87,789,000
Gross Profit: RM 21,576,000
Profit Before Tax: RM 7,650,000
Net Profit for the Period: RM 4,648,000
Basic Earnings Per Share: 1.71 sen
Revenue for the quarter decreased by approximately 7.2% compared to the corresponding quarter last year. More significantly, the company recorded a net loss of RM 1.79 million, a stark contrast to the RM 4.65 million net profit in Q3 FY2024. This shift was primarily driven by a substantial increase in operating expenses, which rose from RM 14.27 million to RM 16.74 million, and higher finance costs.
Year-to-Date Performance: A Broader Perspective
While the quarterly results show a dip, KOBAY’s year-to-date (YTD) performance for the nine months ended 31 March 2025 tells a story of overall growth in top-line figures, albeit with compressed margins.
YTD FY2025 (Unaudited)
Revenue: RM 257,344,000
Gross Profit: RM 64,792,000
Profit Before Tax: RM 13,575,000
Net Profit for the Period: RM 6,434,000
Basic Earnings Per Share: 3.18 sen
YTD FY2024 (Unaudited)
Revenue: RM 237,803,000
Gross Profit: RM 52,573,000
Profit Before Tax: RM 16,313,000
Net Profit for the Period: RM 8,369,000
Basic Earnings Per Share: 3.15 sen
For the nine-month period, KOBAY’s revenue increased by approximately 8.2%, reaching RM 257.34 million. This positive revenue growth indicates continued demand for the company’s offerings. However, the YTD profit before tax saw a decline of about 16.8%, settling at RM 13.58 million. Similarly, net profit for the period decreased by approximately 23.2% to RM 6.43 million. Despite the profit contraction, basic earnings per share for the YTD period actually saw a marginal increase from 3.15 sen to 3.18 sen, largely due to profit attributable to owners of the parent showing a slight increase.
The discrepancy between YTD revenue growth and profit decline points to rising operational costs and finance expenses. YTD operating expenses surged from RM 36.24 million to RM 53.09 million, which is a significant factor impacting overall profitability.
Financial Health Check: Balance Sheet Insights
A look at KOBAY’s balance sheet as of 31 March 2025 reveals a stable financial position with growth in overall assets and equity.
| Balance Sheet Item | As at 31/03/2025 (RM ‘000) | As at 30/06/2024 (RM ‘000) | Change (RM ‘000) |
|---|---|---|---|
| Total Assets | 617,595 | 609,215 | +8,380 |
| Total Equity | 402,185 | 396,728 | +5,457 |
| Net Assets per Ordinary Share (RM) | 1.22 | 1.19 | +0.03 |
| Cash & Cash Equivalents (Balance Sheet) | 57,513 | 57,943 | -430 |
| Land held for development | 60,464 | 51,759 | +8,705 |
| Inventories (Properties) | 111,320 | 106,012 | +5,308 |
The company’s total assets grew to RM 617.60 million from RM 609.22 million at the end of FY2024, indicating continued investment and expansion. Total equity also saw a healthy increase to RM 402.19 million, pushing net assets per ordinary share higher from RM 1.19 to RM 1.22. This reflects a solid underlying financial foundation.
A notable increase in “Land held for development” and “Inventories (Properties)” suggests ongoing or planned property development activities, which could be a key growth driver in the future. However, current liabilities have also increased, primarily due to higher loans and borrowings, which could impact liquidity if not managed effectively.
Cash Flow Dynamics: Managing Liquidity
Understanding cash flow is crucial for assessing a company’s operational efficiency and ability to fund its activities. KOBAY’s cash flow statement for the nine months ended 31 March 2025 shows a shift in its cash generation profile.
YTD FY2025 (Unaudited)
Net Cash from Operating Activities: RM 1,329,000
Net Cash Used in Investing Activities: (RM 10,389,000)
Net Cash from Financing Activities: RM 1,228,000
Net Change in Cash & Cash Equivalents: (RM 7,832,000)
Cash & Cash Equivalents at End of Period: RM 43,590,000
YTD FY2024 (Unaudited)
Net Cash from Operating Activities: RM 12,872,000
Net Cash Used in Investing Activities: (RM 19,693,000)
Net Cash from Financing Activities: RM 7,495,000
Net Change in Cash & Cash Equivalents: RM 674,000
Cash & Cash Equivalents at End of Period: RM 44,568,000
KOBAY experienced a significant reduction in net cash generated from operating activities, falling from RM 12.87 million in the previous YTD period to just RM 1.33 million. This indicates that a larger portion of operational profits are being tied up in working capital or are being eroded by rising costs. On the investing front, the company utilized RM 10.39 million, a decrease from RM 19.69 million previously, suggesting potentially lower capital expenditure or fewer acquisitions during this period. Cash from financing activities also saw a reduction, contributing RM 1.23 million compared to RM 7.50 million last year. Overall, the net change in cash and cash equivalents for the period was negative, leading to a slight decrease in the total cash balance at the end of the period.
Navigating Risks and Future Prospects
While the condensed report does not provide detailed commentary on business unit performance or explicit risks and strategies, we can infer some potential challenges and opportunities for KOBAY based on the financial figures. The significant increase in operating expenses and finance costs, coupled with a quarterly loss, suggests that the company is facing cost pressures, possibly from raw material prices, labor costs, or higher interest rates. The reduction in operating cash flow also points to potential working capital management challenges or a slowdown in collections.
However, the year-to-date revenue growth indicates underlying demand for KOBAY’s products and services. The increase in “Land held for development” and “Inventories (Properties)” on the balance sheet suggests continued investment in its property development segment, which could be a long-term growth driver. The slight increase in YTD EPS, despite profit decline, may indicate efficient capital structure management or a favorable impact from non-controlling interests.
Moving forward, KOBAY will likely need to focus on cost optimization and efficient working capital management to improve its profit margins and cash flow from operations. Monitoring the property market and general economic conditions will be crucial, as these will directly influence the success of its development projects and overall demand for its manufacturing and engineering services. The company’s ability to navigate these challenges while capitalizing on its strategic investments will be key to its future performance.
Summary and Outlook
KOBAY TECHNOLOGY BHD.’s Q3 FY2025 report presents a mixed bag. While the quarter saw a dip into net loss due to increased operating and finance costs, the year-to-date performance shows resilience with revenue growth. The balance sheet remains robust, reflecting continued asset expansion and a healthy equity base, supported by strategic investments in land and properties for future development. However, the significant decline in operating cash flow warrants close attention.
Key points from this report include:
- The quarterly profit was negatively impacted by higher operating expenses and finance costs, resulting in a net loss.
- Despite the quarterly setback, year-to-date revenue has shown positive growth, indicating underlying market demand.
- The balance sheet remains strong, with increased total assets and equity, reflecting a stable financial foundation for future endeavors.
- Cash flow from operations saw a notable decrease, suggesting a need for enhanced working capital management and cost control.
- Strategic investments in property development assets signal potential future growth areas for the company.
Looking ahead, KOBAY’s ability to manage its cost base, optimize cash flow, and successfully execute its property development plans will be critical. The company operates in dynamic sectors, and its strategic agility in responding to market conditions will determine its long-term success.
What are your thoughts on KOBAY’s latest performance? Do you believe their strategic investments will pay off in the coming quarters, or are the rising costs a significant concern? Share your insights in the comments section below!
