Navigating the Road Ahead: A Deep Dive into JOE HOLDING BERHAD’s Q1 2025 Performance
Greetings, fellow investors and market enthusiasts! Today, we’re unboxing the latest unaudited interim report from JOE HOLDING BERHAD for the quarter ended 31 March 2025. While the journey remains challenging, this report offers a glimpse into the company’s resilience and strategic maneuvers in a dynamic market. The core takeaway? JOE Holding has significantly narrowed its losses compared to the same period last year, signaling a potential turning point amidst ongoing market headwinds.
Let’s dive into the numbers and understand what’s driving these changes and what lies on the horizon for this Malaysian player.
Core Data Highlights: Unpacking the Numbers
Quarterly Performance: A Significant Improvement in Profitability
JOE HOLDING BERHAD’s first quarter of 2025 (Q1 FY2025) showcased a notable improvement in its financial health, despite a dip in revenue. The Group managed to significantly reduce its loss after tax compared to the corresponding quarter of the previous year.
Q1 FY2025 (31 March 2025)
Sales: RM2.73 million
Loss After Tax: (RM3.41 million)
Basic Loss Per Share: (1.12 sen)
Q1 FY2024 (31 March 2024)
Sales: RM4.39 million
Loss After Tax: (RM17.28 million)
Basic Loss Per Share: (0.95 sen)
The sales revenue saw a decline from RM4.39 million to RM2.73 million. This decrease was primarily attributed to the disposal of GP Products Sdn. Bhd. and its subsidiary, as well as a strategic streamlining of the distribution channel. However, the more encouraging news comes from the loss after tax, which improved dramatically from RM17.28 million to RM3.41 million. This substantial reduction in losses was largely driven by a lower net fair value loss on quoted investments (RM1.50 million in Q1 FY2025 vs RM8.70 million in Q1 FY2024) and a reversal of impairment on property, plant and equipment of RM2.27 million, contrasting with an impairment of RM9.07 million in the previous year.
Year-to-Date Performance: Sustained Momentum
Looking at the cumulative performance for the financial year-to-date, JOE HOLDING BERHAD continued to demonstrate a trend of reduced losses, reflecting the positive impact of the factors mentioned above.
YTD Q1 FY2025 (31 March 2025)
Sales: RM15.39 million
Loss After Tax: (RM9.90 million)
Basic Loss Per Share: (3.24 sen)
YTD Q1 FY2024 (31 March 2024)
Sales: RM22.71 million
Loss After Tax: (RM19.04 million)
Basic Loss Per Share: (1.04 sen)
The year-to-date sales stood at RM15.39 million, down from RM22.71 million last year, consistent with the quarterly trend. However, the cumulative loss after tax halved from RM19.04 million to RM9.90 million, reinforcing the positive shift in operational efficiency and lower fair value adjustments.
Comparison with Immediate Preceding Quarter (Q4 FY2024)
Comparing the current quarter with the immediate preceding quarter (Q4 FY2024), the Group maintained a consistent revenue level and further reduced its losses, indicating a positive sequential trend.
Current Quarter (31 March 2025)
Revenue: RM2.73 million
Loss After Tax: (RM3.41 million)
Previous Quarter (31 December 2024)
Revenue: RM2.87 million
Loss After Tax: (RM4.54 million)
The slight decrease in revenue from RM2.87 million to RM2.73 million was noted as consistent with the preceding quarter’s performance. Crucially, the loss after tax improved from RM4.54 million to RM3.41 million, mainly due to a lower net fair value loss on quoted investments (RM1.50 million in current quarter vs RM3.55 million in preceding quarter).
Financial Health: Balance Sheet Snapshot
The Group’s balance sheet shows a slight contraction in total assets and equity, primarily influenced by a capital reduction exercise and the expiry of warrants.
As at 31 March 2025
Total Assets: RM225.99 million
Total Equity: RM153.71 million
Net Assets Per Share: RM0.50
As at 31 March 2024
Total Assets: RM240.30 million
Total Equity: RM163.95 million
Net Assets Per Share: RM0.54
Total assets decreased by approximately 6% to RM225.99 million, while total equity saw a decrease of about 6.2% to RM153.71 million. This change in equity is largely due to a capital reduction of RM80.40 million and the expiry of warrants totaling RM34.14 million, which were offset by the absorption of accumulated losses. The Net Assets per Share consequently adjusted from RM0.54 to RM0.50.
Cash Flow: Improved Operating Cash Flow
An encouraging sign comes from the cash flow statement, particularly in operating activities.
YTD 31 March 2025
Net Cash from Operating Activities: RM2.52 million (Generated)
Net Cash from Investing Activities: (RM5.28 million) (Used)
Net Cash from Financing Activities: (RM6.06 million) (Used)
Cash & Cash Equivalents at End: RM25.26 million
YTD 31 March 2024
Net Cash from Operating Activities: (RM5.25 million) (Used)
Net Cash from Investing Activities: (RM32.45 million) (Used)
Net Cash from Financing Activities: (RM0.84 million) (Used)
Cash & Cash Equivalents at End: RM34.08 million
The Group successfully transitioned from using RM5.25 million in operating activities last year to generating RM2.52 million in the current period, a positive reversal indicating improved operational efficiency. Investing activities continued to consume cash, albeit at a significantly reduced rate of RM5.28 million compared to RM32.45 million previously, reflecting less capital expenditure. Financing activities used RM6.06 million, mainly due to increased fixed deposits and loan repayments. Overall, cash and cash equivalents ended the period at RM25.26 million.
Segmental Performance: Automotive Batteries Leading the Way
JOE HOLDING BERHAD operates primarily across three segments: Automotive Batteries, VRLA & Motorcycles Batteries, and Investment Holding, alongside an ‘Others’ category.
For the financial year-to-date ended 31 March 2025:
| Segment | External Revenue (RM’000) – YTD 2025 | External Revenue (RM’000) – YTD 2024 | Segment Results (RM’000) – YTD 2025 | Segment Results (RM’000) – YTD 2024 |
|---|---|---|---|---|
| Automotive Batteries | 13,600 | 16,655 | 166 | 120 |
| VRLA & Motorcycles Batteries | – | 3,685 | – | 658 |
| Investment Holding | 1,790 | 2,368 | (4,015) | (7,123) |
| Others | – | – | (1,530) | (9,454) |
The Automotive Batteries segment remains the primary revenue driver, contributing RM13.60 million in external revenue and achieving a positive segment result of RM166,000. The significant drop in VRLA & Motorcycles Batteries revenue to zero reflects the disposal of the GPP Group. The Investment Holding segment continued to register a loss, though it improved from RM7.12 million to RM4.02 million, largely due to the fair value adjustments discussed earlier.
Risk and Prospect Analysis: Navigating Challenges and Seizing Opportunities
JOE HOLDING BERHAD acknowledges that the business prospects for the 2025 financial year remain challenging. The Group continues to face headwinds in its primary automotive batteries market, compounded by the global oversupply in the glove sector, rising material prices, and fluctuating exchange rates.
Strategic Initiatives for Growth
Despite these challenges, the Group is actively pursuing a robust strategy to enhance its business. Key initiatives include:
- Streamlining Operations: Optimizing processes to improve efficiency.
- Improving Product and Service Quality: Enhancing offerings to meet market demands.
- Brand Revitalization: Strengthening its brand presence and market recognition.
- Continuous Value Chain Optimization: Seeking efficiencies across its supply chain.
- Market Expansion: Promoting its brand and expanding its footprint in both domestic and international markets.
The Glove Industry Diversification: Awaiting Activation
A significant part of JOE Holding’s future strategy involves its diversification into the glove manufacturing segment, a move approved by shareholders in November 2020. The company has successfully acquired four nitrile butadiene rubber/natural rubber powder-free double former dipping lines and strategically installed them at its facility in Chepor, Ipoh.
However, the commencement of operational testing is currently on hold. The primary hurdle is the completion of power supply infrastructure. While TNB has completed installation and cabling works, the connected copper cables have unfortunately been stolen multiple times. The Company is diligently following up with the factory owner and TNB for reinstallation works, including lodging police reports. Simultaneously, management is actively pursuing necessary certifications and anticipates initiating pre-commercial production once all required approvals from relevant authorities are secured.
Capital Utilisation Status
The Group’s capital raised from previous exercises is largely earmarked for the glove business and working capital. As of the end of the reporting quarter:
Private Placement (January 2021 – RM26.62 million):
- RM6.18 million utilized for Investment in the Glove Business.
- Balance available for Glove Business: RM20.15 million.
Right Issues (May 2021 – RM76.48 million):
- RM0.64 million utilized for Estimated Expenses.
- Balance available for Investment in Glove Business: RM40.00 million.
- Balance available for Working Capital: RM35.84 million.
The substantial remaining proceeds for the glove business highlight the company’s commitment to this diversification, pending the resolution of the power supply issue.
Summary and Outlook
JOE HOLDING BERHAD’s Q1 FY2025 report paints a picture of a company actively working to turn the tide. The significant reduction in losses, driven by improved fair value adjustments and impairment reversals, is a positive development. While revenue saw a decline due to strategic restructuring, the focus on operational efficiency and a clearer path to profitability are encouraging signs.
The Group’s long-term prospects hinge significantly on the successful activation of its glove manufacturing segment. The current delays due to power supply infrastructure are a critical bottleneck that needs to be resolved for the company to fully realize its diversification strategy.
Key points from this report:
- Substantial reduction in quarterly and year-to-date losses.
- Improved cash flow from operating activities.
- Strategic streamlining of existing businesses.
- Continued commitment to glove manufacturing diversification.
- Challenges remain in material costs, exchange rates, and the global glove oversupply.
- Critical dependency on resolving power supply issues for glove operations.
The management’s proactive approach to addressing market challenges through streamlining, brand revitalization, and strategic expansion into the glove industry demonstrates a clear vision for the future. However, the path forward will require diligent execution, especially in overcoming the current operational hurdles for the new glove venture.
What’s Your Take?
From my perspective, JOE HOLDING BERHAD is in a transitional phase, demonstrating resilience by significantly narrowing its losses. The strategic shift away from certain segments and the determined push into glove manufacturing indicate a long-term vision. However, the delays in the glove segment’s operational readiness are a key point of concern that investors should closely monitor. The company’s ability to overcome these infrastructure challenges will be crucial for its future growth trajectory.
Do you think JOE HOLDING BERHAD can successfully navigate these challenges and bring its glove operations online soon? What are your thoughts on their strategic direction? Share your insights in the comments below!
