PERAK CORPORATION BERHAD Q1 2025 Latest Quarterly Report Analysis

Greetings, fellow Malaysian investors and market watchers! Today, we’re diving deep into the latest financial pulse of Perak Corporation Berhad (PCB), a company that has been navigating a complex financial landscape. Their first-quarter report for the period ended 31 March 2025 has just landed, and it offers a fascinating glimpse into their operational resilience and the ambitious steps they are taking to regularise their financial standing.

While the company continues to operate on a non-going concern basis and is working diligently on its regularisation plan, this report highlights some encouraging operational improvements and significant progress on its corporate restructuring initiatives. Notably, the Group reported a profit after tax of RM3.6 million for the quarter, a significant turnaround from the same period last year. Let’s unpack the details!

Q1 2025 Performance: A Closer Look

Perak Corporation Berhad recorded a total revenue of RM37.3 million for the first quarter of 2025, a slight dip from RM38.0 million in the corresponding quarter of the previous financial year. This modest decline was primarily due to lower contributions from the port and logistics segment, largely attributed to the absence of non-recurring income recorded last year. However, this was partially offset by a stronger showing from the hospitality and tourism sector.

Despite the slight revenue decrease, the Group achieved a remarkable improvement in profitability. Profit before tax surged by 57.5% to RM6.3 million, compared to RM4.0 million in Q1 2024. This positive momentum flowed through to the bottom line, with profit after tax skyrocketing by 125% to RM3.6 million from RM1.6 million previously. Consequently, basic earnings per share also saw a substantial increase, reaching 0.88 sen, up from 0.39 sen.

Segmental Breakdown: Where the Growth Comes From

Port & Logistics

This segment, comprising operations at Lumut Maritime Terminal (LMT) and Lekir Bulk Terminal (LBT), saw its revenue decrease by 3.74% to RM30.9 million from RM32.1 million in the same quarter last year. This was primarily due to the absence of non-recurring income from marine-related activities. However, despite the revenue dip, the segment’s profit before tax increased by 21.33% to RM9.1 million from RM7.5 million. This improved profitability was a result of effective cost management, including the use of in-house machinery and tipper trucks, as well as reductions in staff welfare, medical expenses, and administrative costs.

Property Development

The property development segment recorded no revenue in Q1 2025, consistent with the previous year. It reported a loss before tax of RM0.4 million, an improvement from the RM3.6 million loss in the corresponding quarter last year. The higher loss in Q1 2024 was mainly due to a loss allowance provision for a financial guarantee contract. The Group is actively seeking new opportunities to develop diverse property projects across Peninsular Malaysia, aiming to capitalise on its expertise and market knowledge for future growth.

Hospitality & Tourism

This segment delivered a strong performance, with revenue increasing by 3.23% to RM6.4 million from RM6.2 million in the prior year’s quarter. More impressively, its pre-tax profit surged by a remarkable 700% to RM1.6 million from RM0.2 million. This significant boost in profitability was mainly driven by a RM1.3 million gain from lease termination and a RM0.4 million debt waiver on lease payable.

Management Services and Others

Revenue for this segment remained consistent at RM0.9 million. However, it reported a higher loss before tax of RM4.0 million, compared to RM3.0 million in the same quarter last year. This increased loss was primarily due to higher emoluments and professional fees incurred, along with the absence of a net gain from the disposal of a previously acquired subsidiary.

Financial Health and the Path Forward

Perak Corporation Berhad’s financial statements are prepared on a non-going concern basis, reflecting the ongoing challenges related to its debt obligations and the need for a comprehensive regularisation plan. As of 31 March 2025, the Group’s current liabilities still exceeded its current assets by RM36.2 million, though this is an improvement from RM40.2 million in 2024.

The Group’s total loans and borrowings stood at RM161.3 million, with RM53.0 million due for repayment within the next 12 months. While cash and bank balances totalled RM24.6 million, the Group acknowledges that these, combined with projected cash inflows from ongoing projects, are insufficient to cover the short-term debt. This underscores the critical importance of the regularisation plan.

Strategies and Prospects: Charting a Course for Recovery

The core of Perak Corporation Berhad’s strategy revolves around its Proposed Regularisation Plan, which was formally submitted to Bursa Malaysia on 9 May 2025. This comprehensive plan aims to strengthen the Group’s financial position, address its PN17 status, and revitalise its business operations. The plan encompasses several key initiatives:

1. Proposed Share Capital Reduction: A restructuring of the company’s issued share capital.
2. Proposed Joint Development of Silver Valley Technology Park (SVTP): A joint venture with Perbadanan Kemajuan Negeri Perak (PKNP) to develop a major industrial hub. This aligns with national industrial development priorities and investor demand for ESG-compliant infrastructure.
3. Proposed Disposals of Lands: Multiple land parcels are slated for disposal, including Parcel 1 Lands (RM21.13 million), Parcel 2 Land (RM49.50 million), Parcel 3 Land (RM18.94 million), and Hinterland (RM8.53 million). These disposals are crucial for generating cash flow.
4. Proposed Settlement: A cash consideration of RM40.38 million from a joint venture agreement with PKNP and Uni-poh Construction Works Sdn Bhd.
5. Proposed Issuance of Redeemable Preference Shares Series B (RPS-B): For the settlement of outstanding liabilities and debt obligations to scheme creditors (RM39.73 million).
6. Amendments to Constitution: To facilitate the issuance of RPS-B and revise redemption dates/dividend rates for existing RPS-A1 and RPS-A2.

The proceeds from these land monetisation efforts are intended to fully redeem the RPS-A1 and RPS-A2, for which extensions until 30 September 2025 have been secured from CIMB and Affin Islamic Bank Berhad, respectively.

From an operational standpoint, the outlook for key segments remains cautiously optimistic:

• Port & Logistics: Despite the revenue dip, improved operational efficiency and cost management are driving profitability. Encouraging growth in LMT throughput signals a positive outlook.
• Property Development: Leveraging on the robust Malaysian property market (which saw record transaction values in 2024, though Q1 2025 saw a slight dip nationally), PCB is positioning its flagship Silver Valley Technology Park (SVTP) Industrial Hub to benefit from industrial growth in Perak. A high-end residential development in Bandar Meru Raya is also in the pipeline.
• Hospitality & Tourism: Building on the success of Visit Perak 2024, the Casuarina Hotel chain is performing well. Service enhancements and facility optimisation are underway to further elevate guest experience and drive sustainable growth.

Challenges and Risks

While the regularisation plan is a positive step, the company faces significant hurdles. The non-going concern basis of preparation highlights the current inability to fully realise assets and discharge liabilities in the normal course of business. The legal challenge from certain creditors seeking to vary the court order and set aside the Scheme of Arrangement also bears watching, though the company views the Scheme as valid and enforceable.

What are your thoughts on Perak Corporation Berhad’s latest report? Do you believe the Proposed Regularisation Plan will be the turning point for the company, enabling it to regain its financial footing and shed its PN17 status? Share your insights in the comments below!

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