TSR Capital Berhad’s Q3 FY2025: Revenue Surges, But Profitability Takes a Hit Amidst Challenging Landscape
Hello fellow investors and market enthusiasts! Today, we’re diving deep into the latest financial performance of TSR Capital Berhad, a familiar name in Malaysia’s construction and property development sectors. The company has just released its unaudited results for the third quarter ended 31 March 2025, and it’s a report that presents a mixed bag of significant revenue growth alongside a noticeable dip in profits.
The core takeaway? TSR Capital has demonstrated impressive top-line expansion, largely fueled by its construction division. However, this growth hasn’t translated proportionally to the bottom line, indicating a more challenging operating environment or shifts in project profitability. Let’s unpack the numbers and see what’s truly driving their performance and what lies ahead for this Malaysian conglomerate.
Financial Performance Highlights: A Closer Look at the Numbers
Individual Quarter Performance (Q3 FY2025 vs. Q3 FY2024)
The third quarter saw a substantial increase in revenue, a positive sign of business activity. However, profitability metrics tell a different story for this specific period.
Q3 FY2025
Revenue: RM25.075 million
Profit Before Taxation: RM0.808 million
Profit for the Period: RM0.777 million
Basic Earnings Per Share: 0.4 sen
Q3 FY2024
Revenue: RM13.725 million
Profit Before Taxation: RM1.753 million
Profit for the Period: RM1.478 million
Basic Earnings Per Share: 0.8 sen
As you can see, revenue soared by approximately 83% compared to the same quarter last year, reaching RM25.075 million from RM13.725 million. This significant boost was primarily attributed to higher contributions from the Construction division. However, Profit Before Taxation (PBT) decreased by about 54%, falling from RM1.753 million to RM0.808 million. This decline in profit was mainly due to lower contributions from development projects in the current quarter, indicating potential margin pressures or a shift in the mix of profitable projects.
Cumulative Nine-Month Performance (9M FY2025 vs. 9M FY2024)
Looking at the broader nine-month picture, the trend of strong revenue growth but declining profit continues, albeit with different magnitudes.
9M FY2025
Revenue: RM84.506 million
Profit Before Taxation: RM7.888 million
Profit for the Period: RM2.025 million
Basic Earnings Per Share: 1.2 sen
9M FY2024
Revenue: RM43.270 million
Profit Before Taxation: RM10.247 million
Profit for the Period: RM9.899 million
Basic Earnings Per Share: 5.7 sen
For the nine months ended 31 March 2025, TSR Capital’s revenue more than doubled, jumping by approximately 95% to RM84.506 million from RM43.270 million in the previous corresponding period. Despite this impressive top-line growth, cumulative PBT saw a decline of about 23%, from RM10.247 million to RM7.888 million. The Profit for the Period experienced an even sharper drop of roughly 79%, settling at RM2.025 million from RM9.899 million, which was significantly impacted by a higher income tax expense in the current period (RM5.863 million in 9M FY2025 vs RM0.348 million in 9M FY2204).
Segmental Performance Analysis (9 Months Ended 31 March 2025)
To understand the drivers behind these figures, let’s break down the performance by business segment:
| Segment | Sales (9M FY2025, RM’000) | Sales (9M FY2024, RM’000) | PBT (9M FY2025, RM’000) | PBT (9M FY2024, RM’000) |
|---|---|---|---|---|
| Construction | 52,917 | 33,870 | 5,351 | 7,731 |
| Property Development | 33,000 | 6,011 | 4,114 | 3,391 |
| Investment and Others | 1,014 | 3,389 | (852) | (147) |
The **Construction** segment remains a cornerstone, significantly boosting overall revenue with a 56% increase in sales. However, its profit before taxation declined, suggesting that while the volume of work increased, the margins on these projects might be tighter, or costs have increased. Meanwhile, the **Property Development** segment witnessed an astounding 449% surge in sales, contributing significantly to the overall revenue growth. This segment also saw an increase in PBT, albeit not proportional to the massive sales growth, indicating that the new projects might be in early stages of recognition or have different profitability profiles. The **Investment and Others** segment saw a decline in sales and an increased loss, weighing down overall profitability.
Financial Health: Balance Sheet and Cash Flow
Beyond the income statement, a peek at the balance sheet and cash flow statement provides insights into the company’s financial robustness.
Statement of Financial Position (as at 31 March 2025 vs. 30 June 2024)
TSR Capital’s total assets grew to RM266.734 million from RM241.334 million, reflecting expansion. Equity attributable to owners of the Company saw a slight increase to RM150.226 million from RM148.199 million, pushing Net Assets Per Share up marginally to RM0.86. However, total liabilities also increased significantly to RM117.530 million from RM94.155 million, primarily driven by a substantial rise in current loans and borrowings, which jumped from RM10.411 million to RM27.459 million.
Cash Flow Statement (9 Months Ended 31 March 2025 vs. 2024)
Cash flow from operating activities remained stable at RM7.608 million (9M FY2025) compared to RM7.566 million (9M FY2024), which is a healthy sign. However, net cash from investing activities turned negative at (RM2.945 million), primarily due to increased purchase of property, plant and equipment and no proceeds from disposal of investment properties or assets held for sale, unlike the previous period. Net cash used in financing activities reduced to (RM5.019 million), largely due to a smaller net decrease in loans and borrowings compared to the previous year. Overall, the company experienced a net decrease in cash and cash equivalents of (RM0.356 million), bringing the cash and cash equivalents carried forward to RM3.372 million.
Risks and Prospects: Navigating the Future
The Board anticipates that both the construction and property sectors will remain challenging for the financial year ending 30 June 2025. Despite this, TSR Capital plans to selectively participate in construction project tenders and continue expanding its property development activities. A key development to watch is the launch of its development project in Kwasa Damansara, which is expected to contribute a higher proportion of the Group’s revenue moving forward.
However, like any business operating in dynamic sectors, TSR Capital faces certain risks. The report highlights ongoing material litigations involving its wholly-owned subsidiary, TSR Bina Sdn Bhd. These include a claim by Josu Engineering Construction Sdn Bhd for unlawful termination of a letter of award, seeking approximately RM6 million in damages, and an arbitration proceeding with Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (SPYTL), where TSR Bina is claiming around RM35 million while facing a counter-claim of approximately RM22 million. While the company has seen some positive developments in the SPYTL case recently, these litigations represent potential financial and operational uncertainties.
Dividends
For the quarter ended 31 March 2025, the Board of Directors did not recommend the payment of any dividend.
Summary and Outlook
TSR Capital Berhad’s Q3 FY2025 results present a narrative of robust top-line growth, particularly driven by its construction and property development segments. The significant increase in revenue underscores the company’s ability to secure new projects and expand its operational scale. However, the accompanying decline in profit before taxation and net profit, exacerbated by higher tax expenses and potentially tighter margins in certain segments, suggests that revenue growth alone does not guarantee proportional profitability in the current challenging market.
The company’s strategic focus on selective participation in construction tenders and the anticipated higher revenue contribution from the Kwasa Damansara property development project signal a clear path forward. While the challenging market conditions and ongoing litigations present headwinds, TSR Capital’s ability to maintain stable operating cash flows and grow its asset base indicates underlying resilience. The outcome of the Kwasa Damansara project and the company’s success in managing project profitability will be key determinants of its future financial trajectory.
Key points to monitor include:
- The company’s ability to improve profit margins in its construction segment despite competitive tender environments.
- The progress and revenue recognition from the Kwasa Damansara property development project.
- The resolution and financial impact of the ongoing material litigations.
- Overall cost management and operational efficiency in a challenging economic climate.
Your Thoughts?
This report highlights TSR Capital’s ambition for growth, but also the complexities of operating in Malaysia’s construction and property sectors. Given the significant revenue growth but declining profits, do you think TSR Capital can successfully navigate these challenges and translate its top-line expansion into stronger bottom-line performance in the coming quarters? Share your insights and perspectives in the comments section below!
Stay tuned for more analyses of Malaysian companies and market trends!
Disclaimer: This blog post is for informational purposes only and does not constitute financial advice or . Always conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions.
