REACH TEN HOLDINGS BERHAD: A Look at Their Inaugural Q1 2025 Financial Performance Post-Merger
Greetings, fellow investors! Today, we’re diving into the first-quarter financial report for REACH TEN HOLDINGS BERHAD for the period ended 31 March 2025. This report marks a significant milestone as it’s the company’s second interim financial statement and the first to reflect the consolidated performance post-merger of its key subsidiaries, which were completed on 5 February 2025. While direct year-on-year comparisons aren’t available due to the company’s recent listing, the numbers reveal a promising start for this emerging player in Malaysia’s telecommunications infrastructure sector. What’s more, the Board has already declared a significant interim dividend, signaling confidence in future prospects!
Let’s unpack the key highlights and understand what drives REACH TEN’s initial performance and what lies ahead for this newly consolidated entity.
Unpacking the Q1 2025 Financials: A Strong Start
For the first quarter ended 31 March 2025, REACH TEN HOLDINGS BERHAD has reported its initial consolidated financial results. It’s important to note that these figures represent only two months of consolidated performance (February and March 2025) following the merger of its subsidiaries on 5 February 2025. As such, direct comparisons with prior periods are not applicable, which is a common occurrence for newly listed or restructured entities.
Revenue and Profitability Overview
The Group recorded a robust revenue and profit for this initial reporting period, primarily driven by its core business segments.
Q1 2025 (2 Months Consolidated)
Revenue: RM23.05 million
Gross Profit: RM11.46 million
Profit Before Taxation (PBT): RM9.41 million
Profit After Taxation (PAT): RM7.12 million
Basic & Diluted EPS: 0.89 sen
Q1 2024 (Comparative)
Revenue: N/A
Gross Profit: N/A
Profit Before Taxation (PBT): N/A
Profit After Taxation (PAT): N/A
Basic & Diluted EPS: N/A
The impressive RM23.05 million in revenue and RM7.12 million in net profit, achieved within just two months of consolidated operations, underscores the immediate positive impact of the recent mergers and the underlying strength of the Group’s business segments.
Segmental Performance Breakdown
REACH TEN’s revenue is diversified across key telecommunication service segments, with satellite-based communications leading the charge.
| Business Segment | Revenue (RM’000) – Q1 2025 | Contribution (%) |
|---|---|---|
| Satellite-based communication networks and services | 14,576 | 63.23% |
| Fibre optic communication networks and services | 4,935 | 21.41% |
| Telecommunications infrastructure services and managed services | 3,542 | 15.36% |
| Total | 23,053 | 100.00% |
The dominant contribution from the Satellite-based communication networks and services segment (63.23%) highlights its crucial role in the Group’s revenue generation, driven by ongoing projects like the VSAT broadband services for rural communities.
Financial Health: Balance Sheet & Cash Flow
As at 31 March 2025, REACH TEN’s financial position appears solid, with healthy asset and equity bases. The Group reported total assets of RM138.21 million and a total equity of RM110.99 million, resulting in a net asset per ordinary share of RM0.14. The cash and bank balances stood at RM33.05 million, supplemented by fixed deposits of RM29.99 million, indicating good liquidity.
However, the cash flow statement shows a net decrease in cash and cash equivalents of RM10.47 million for the period. This was primarily due to negative cash flow from operating activities, largely influenced by significant income tax payments made during the period and changes in working capital, such as a decrease in trade and other payables and an increase in contract assets. This is not uncommon for companies with substantial project-based work and tax obligations, but it’s an area to monitor in future reports.
A Sweet Surprise: Interim Dividend Declared!
In a positive move for shareholders, the Board declared a first interim single-tier dividend of 1 sen per share, amounting to approximately RM10 million, for the financial year ending 31 December 2025. This dividend, payable on 21 July 2025 with an entitlement date of 30 June 2025, demonstrates the company’s commitment to returning value to its shareholders, even in its early stages as a consolidated and listed entity.
Prospects & Strategic Growth Initiatives
REACH TEN HOLDINGS BERHAD is optimistic about its future, aligning its strategies with Malaysia’s national digital transformation agenda and the ongoing rollout of 5G networks. The rising demand for high-speed connectivity, especially in underserved rural areas, presents significant growth opportunities for the Group.
The company plans to fuel its long-term growth through substantial capital expenditure, allocating RM89.3 million (or 85.9%) of its total IPO proceeds towards operational expansion over the next three years. Key initiatives include:
- Expansion and establishment of fibre optic communication networks infrastructure: A significant RM60 million is earmarked for this, reflecting the shift towards high-speed wired connectivity.
- Construction of new telecommunication towers: RM25 million will be invested in expanding the physical infrastructure backbone.
- Enhancement of satellite-based communication networks and service capabilities: RM4.3 million will strengthen their existing strength in satellite communications, particularly vital for remote areas.
The Group’s continued investment in Sarawak’s telecommunications infrastructure is expected to enhance service quality and operational resilience, reinforcing its regional stronghold. Management aims to expand its core revenue-generating segments while actively exploring emerging technologies and strategic partnerships. Barring any unforeseen macroeconomic or industry-specific disruptions, the Group is confident in delivering strong financial performance in the current financial year.
Summary and
REACH TEN HOLDINGS BERHAD’s Q1 2025 report, though an initial glimpse into its consolidated performance, paints a picture of a company with strong fundamentals and clear strategic direction. The impressive two-month revenue and profit figures, coupled with a declared interim dividend, indicate a promising start for this newly merged and listed entity. The substantial allocation of IPO proceeds towards expanding critical telecommunications infrastructure positions the Group well to capitalize on Malaysia’s digital growth ambitions.
While the lack of comparative figures due to its recent listing and merger makes a direct performance assessment challenging, the absolute numbers are encouraging. Investors should keep an eye on how the Group executes its expansion plans and manages its working capital, especially given the negative operating cash flow in this period which was heavily influenced by tax payments and working capital movements.
Key points to consider from this report include:
- Strong Initial Performance: Despite only two months of consolidated data, the revenue and profit figures are robust, demonstrating the immediate impact of the acquired subsidiaries.
- Strategic Growth Focus: The significant allocation of IPO proceeds towards fibre optics, new towers, and satellite network enhancements aligns with national digital transformation trends.
- Shareholder Returns: The declaration of an interim dividend so early in its listed life is a positive signal of management’s confidence and commitment to shareholders.
- Operational Cash Flow: While negative this quarter, the underlying reasons (tax payments, working capital shifts) should be monitored for future trends.
From a professional standpoint, REACH TEN HOLDINGS BERHAD appears to be strategically positioned to benefit from the ongoing digital push in Malaysia. Their focus on both urban and underserved remote areas through diverse communication technologies (satellite and fibre) provides a balanced approach to market penetration. The execution of their IPO proceeds utilization will be crucial in determining their long-term success and ability to sustain this initial momentum.
What are your thoughts on REACH TEN’s maiden consolidated results? Do you believe the company can effectively deploy its IPO funds to maintain this growth trajectory in the competitive Malaysian telecommunications landscape? Share your insights in the comments below!
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