DFX Navigates a Lumpy Quarter: A Deep Dive into Their Latest Financials
Greetings, fellow Malaysian retail investors! Today, we’re unboxing the latest financial report from DIVFEX BERHAD (DFX) for the financial period ended 31 March 2025. This quarter presents a fascinating mix of challenges and strategic positioning, highlighting both a dip in immediate performance and a robust outlook for future growth. While the headline figures might suggest a slowdown, a closer look reveals DFX is actively adapting and building a stronger foundation, particularly with a significant increase in their order book. Let’s delve into the numbers and understand what’s truly happening behind the scenes.
Core Data Highlights: A Closer Look at DFX’s Performance
DFX’s third quarter of the financial year 2025 shows a mixed performance, largely influenced by the inherent nature of its system integration business. While top-line revenue and overall profit saw a decline compared to the same period last year, strategic shifts and order book growth paint a more nuanced picture.
Overall Financial Performance
For the three months ended 31 March 2025, DFX reported a notable decrease in revenue and profit. The company’s revenue stood at RM9.07 million, a 19.0% decrease from RM11.20 million in the corresponding quarter of the previous year. This decline was primarily attributed to lower project billings within its core Information and Communication Technology (ICT) business segment.
Profit before tax (PBT) also saw a significant drop, falling by 51.7% to RM0.94 million from RM1.95 million in the same period last year. Consequently, profit for the financial quarter attributable to owners of the parent decreased by 55.0% to RM0.56 million, leading to a basic earnings per share (EPS) of 0.07 sen, down from 0.17 sen.
Q3 FY2025 (3 Months Ended 31 March 2025)
| Metric | RM’000 | % Change (vs. Prior Year) |
|---|---|---|
| Revenue | 9,070 | (19.0%) |
| Profit Before Tax | 940 | (51.7%) |
| Profit Attributable to Owners | 558 | (55.0%) |
| Basic EPS (sen) | 0.07 | N/A |
Q3 FY2024 (3 Months Ended 31 March 2024)
| Metric | RM’000 |
|---|---|
| Revenue | 11,198 |
| Profit Before Tax | 1,946 |
| Profit Attributable to Owners | 1,239 |
| Basic EPS (sen) | 0.17 |
On a year-to-date basis (nine months ended 31 March 2025), the trends are similar. Revenue declined by 21.6% to RM36.12 million from RM46.08 million. Profit before tax plummeted by 78.0% to RM1.47 million from RM6.70 million. Profit attributable to owners saw an even sharper decline of 97.8% to RM0.08 million, resulting in a basic EPS of 0.01 sen for the nine-month period.
A notable positive, however, was the significant increase in Other Income, which grew by over 100% both for the quarter and year-to-date. This was driven by factors such as fair value gains on derivative financial instruments, increased interest income, and reversal of impairment losses on receivables, providing some offset to the core operational decline.
Segmental Performance
DFX’s operations are primarily divided into the ICT segment and an ‘Others’ segment (comprising investment holding, sales and distribution of hardware/software, and consumer food products). The ICT segment, which contributes the majority of the Group’s revenue, was the main driver of the overall decline.
| Segment | 9 Months Ended 31-Mar-25 (RM’000) | 9 Months Ended 31-Mar-24 (RM’000) | Variance (%) |
|---|---|---|---|
| ICT Revenue | 36,576 | 46,494 | (21.3%) |
| Others Revenue | 829 | 360 | >100.0% |
| ICT Profit Before Tax | 2,266 | 8,031 | (71.8%) |
| Others Profit Before Tax | (796) | (1,334) | (40.3%) (reduced loss) |
The ICT segment’s profit before tax decreased by 71.8% year-to-date, reflecting the lower project billings. Conversely, the ‘Others’ segment showed an improved performance, reducing its loss before tax by 40.3% year-on-year. This improvement was partly due to higher profit contribution from ICT advisory and consulting services provided during the current quarter, indicating diversification within this segment.
Financial Health and Cash Flow
DFX’s balance sheet as at 31 March 2025 shows an increase in total assets to RM102.89 million from RM78.32 million at 30 June 2024. This was largely driven by a significant increase in current assets, particularly inventories (more than doubling to RM41.62 million from RM19.89 million) and trade receivables. Total equity also saw a slight increase to RM45.21 million.
However, current liabilities also increased substantially to RM56.95 million from RM32.80 million, mainly due to higher trade payables and other payables. This indicates an expansion of operational activities and potentially longer payment cycles with suppliers.
From a cash flow perspective, the Group experienced increased cash outflows. Net cash used in operating activities widened to RM1.78 million (from RM0.73 million last year), while investing activities shifted from a net inflow to a net outflow of RM1.25 million. This shift in investing cash flow is partly attributable to the disposal of a 50.001% equity interest in Hyperaccess Sdn. Bhd. for a cash consideration of RM75,579 on 8 January 2025, alongside an investment in Redeemable Cumulative and Convertible Preference Shares. Overall, cash and cash equivalents at the end of the period decreased to RM16.16 million from RM21.12 million.
Risk and Prospect Analysis: Looking Ahead
While the latest quarter’s financial results present a challenging picture, DFX’s management has provided insights into its strategic direction and market outlook. The company acknowledges the “lumpy” nature of its revenue and earnings, which is typical for businesses heavily involved in system integration projects where initiation and deployment timings can significantly impact quarterly results.
Prospects and Order Book Growth
The outlook for DFX remains positive, especially given the stable demand for data center and hyperscale networks, along with other ICT business areas in Malaysia. The Group’s three key ICT subsidiaries – DGB, EXCEL, and FINTHER – continue to contribute positively to both revenue and profit. Crucially, as at the end of March 2025, DFX boasts a total order book of RM152.5 million. This represents a significant increase of RM19.7 million compared to the preceding quarter, indicating a strong pipeline of future projects that could translate into healthier revenue streams in upcoming periods.
Key Risks and Management Strategies
The primary risk highlighted by the company is the inherent volatility in its quarterly and annual revenue and earnings due to the project-based nature of its ICT business. Large project initiation and deployment timings can cause significant fluctuations, as observed in the current quarter’s lower project billings. To mitigate this, DFX continues to focus on securing new projects and managing its project pipeline effectively. The disposal of Hyperaccess Sdn. Bhd. also reflects a strategic move, potentially streamlining operations or reallocating capital to core growth areas.
Summary and
DFX’s latest quarterly report paints a picture of a company navigating a transitional phase. While the current quarter’s performance shows a noticeable decline in both revenue and profit, largely due to lower project billings in its core ICT segment, it’s crucial to consider the broader context.
The significant growth in the company’s order book to RM152.5 million is a strong forward-looking indicator, suggesting that future revenue streams are being secured. The positive outlook for data center and hyperscale network demand in Malaysia also bodes well for DFX’s core business. The “Others” segment, though smaller, showed signs of improvement, indicating some diversification and new revenue contributions from advisory services.
However, investors should be mindful of the inherent “lumpiness” in DFX’s earnings, which means that quarter-to-quarter results can fluctuate significantly depending on project cycles. The increased cash outflow from operations and investing activities also warrants attention, though the latter was influenced by strategic asset disposal and new investments.
It is important to note that this analysis is for informational purposes only and does not constitute any form of investment advice or recommendation to buy or sell shares in DFX. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
Key points from this report include:
- Significant decline in revenue and profit for the quarter and year-to-date, primarily from the ICT segment.
- Strong growth in the order book, providing a positive outlook for future revenue.
- Improved performance in the ‘Others’ business segment, driven by advisory services.
- Increase in both current assets (especially inventories) and current liabilities, indicating active operations.
- Increased cash outflow from operations and investing activities.
- The company’s performance is susceptible to the timing and scale of large ICT projects.
Final Thoughts and Your Perspective
DFX’s latest report is a classic example of how a single quarter’s numbers might not tell the whole story. While the immediate financial performance was softer, the strategic increase in their order book, coupled with a positive industry outlook for ICT infrastructure, suggests that DFX is positioning itself for future growth. The challenge, as highlighted, will be translating this robust order book into consistent, predictable earnings, given the project-based nature of their business.
What are your thoughts on DFX’s performance and prospects? Do you believe the growing order book will effectively mitigate the “lumpiness” in their future earnings? Share your insights in the comments section below!
