Compugates Holdings Berhad Q1 2025: Navigating Challenges with Strategic Diversification

Greetings, fellow investors and market watchers! Today, we’re diving into the latest financial pulse of

, as they released their unaudited interim financial statements for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into a company actively transforming its business landscape. While the numbers show a continued journey through challenging waters, there are significant strategic shifts underway that warrant our attention, particularly their bold moves into property development.

So, let’s break down the key figures and strategic plays that are shaping Compugates’ future.

Q1 2025 Performance: A Mixed Bag of Growth and Losses

Compugates’ first quarter of 2025 saw a modest increase in revenue compared to the same period last year, primarily driven by their trading and services segment. However, the Group continued to record losses, albeit with some positive shifts when compared to the immediate preceding quarter.

Revenue Performance: A Modest Uptick Year-on-Year

The Group’s revenue for Q1 2025 stood at RM5.666 million, representing a 5.9% increase compared to RM5.351 million in the corresponding quarter of 2024. This growth was mainly attributed to higher turnover in the trading of IT hardware and related products.

However, when compared to the immediate preceding quarter (Q4 2024), revenue saw a slight decrease of 5.4% from RM5.991 million. This dip was mainly due to lower demand for certain imaging and information technology products during the first quarter of the year, which can often be a seasonally slower period after year-end festivities.

Losses: Increased Year-on-Year, But Improved Quarter-on-Quarter

Compugates recorded a Loss Before Tax (LBT) of RM(2.214) million in Q1 2025, a 17.5% higher loss compared to RM(1.885) million in Q1 2024. This increase in loss was primarily due to escalated administrative expenses, although partially offset by some cost savings in finance expenses.

On a more positive note, the LBT for Q1 2025 showed a significant improvement of 56.4% compared to the immediate preceding quarter’s LBT of RM(5.083) million. This substantial reduction in losses was mainly attributed to lower administrative expenses and operating costs during the current quarter.

The Loss After Tax (LAT) and Loss attributable to ordinary equity holders mirrored the trends of the LBT, with a 17.5% increase in loss year-on-year and a 56.6% improvement quarter-on-quarter. Basic loss per share remained at (0.03) sen for both Q1 2025 and Q1 2024.

Segmental Performance: Trading Stabilises, Agriculture Losses Widen

Looking at the business segments:

The

, the primary revenue driver, saw its losses slightly narrow to RM(1.200) million from RM(1.248) million in Q1 2024. This indicates some stability in its operational performance. Conversely, the

recorded a higher loss of RM(1.001) million in Q1 2025, compared to RM(0.625) million in the same period last year, highlighting ongoing challenges in this developing area.

Strategic Shifts: Property Development Takes Center Stage

Compugates is acutely aware of the challenging conditions in its traditional ICT products trading business, which has been impacted by global events, commodity market uncertainties, and the weakening Ringgit. To mitigate this reliance and improve financial performance, the Group is aggressively expanding its property development business.

Key Property Development Initiatives:

• Daun Villa Project (with Jade Classic Sdn Bhd – JCSB): This joint venture project is progressing well. Phase 1 sales have fully commenced, with an impressive
  90% of units booked

  and over 50% of Sales and Purchase Agreements (S&P) signed. As of 30 April 2025, the Group has received RM2.68 million from JCSB for Phase 1 sales. This project is expected to provide progressive payments as construction advances. Phase 2 sales are targeted for the first half of 2026.

• New RM1.36 Billion Mixed-Use Development (with CPG Puncak Sdn Bhd): A significant new joint venture was inked on 31 January 2025, to develop a large mixed-use project on 35 acres of the Group’s land in Cybersouth. This ambitious project, valued at RM1.36 billion in Gross Development Value (GDV), entitles Compugates to a minimum landowner’s entitlement of RM234 million. This represents a substantial 73.85% premium over the land’s market value, promising a significant long-term revenue stream over its projected 13-year development period.

The Board is optimistic about the property market outlook in Malaysia, viewing these ventures as crucial for expanding revenue streams and reducing dependence on the trading segment.

Refocusing the Trading & Services Segment:

Despite the strong push into property, the Group is not abandoning its trading and services segment. Recognizing its importance for recurrent, stable monthly revenue, especially until property income becomes substantial, Compugates is:

• Negotiating with new ICT product suppliers for more lenient credit payment terms to improve cash liquidity.
• Diversifying its product range and leveraging e-commerce platforms like Shopee and Lazada to reach a wider customer base.
• Implementing cost rationalisation strategies to reduce operating costs and aim for profitability in this segment.

Agarwood Plantation: A Long-Term Play

The Group’s agarwood plantation in Kuala Kangsar, Perak, with over 20,000 trees, remains a long-term prospect. While initial inoculation trials yielded unfavorable results, a second round was conducted in April 2023, with results expected by Q2 2025. The Group is exploring different inoculants to ensure optimal resin quality and quantity, with the ultimate goal of harvesting and selling the resin.

Financial Health and Corporate Developments:

• Borrowings: The Group successfully reduced its loans from director/CEO/related parties/bank to RM0.650 million as at 31 March 2025, a significant reduction from RM1.374 million at 31 December 2024. This indicates a positive step in managing debt.
• Utilisation of Proceeds: Funds from previous private placements are being deployed, with balances remaining for working capital and the Integrated Water Supply Scheme, pending further agarwood inoculation trials.
• Material Litigation: Compugates has successfully been awarded RM750,584 in damages and RM5,000 in costs in a litigation case, which has since been paid by the opposing party. Appeals from both sides are ongoing regarding other heads of damages.
• Employees’ Share Option Scheme (ESOS): Bursa Malaysia has approved the listing and quotation for up to 15% of CHB’s issued shares for the proposed ESOS, a move that could align employee incentives with company performance.

What are your thoughts on Compugates Holdings Berhad’s strategic shift? Do you believe their property ventures will successfully transform their financial landscape in the coming years? Share your insights and perspectives in the comments below!

Stay tuned for more updates on Malaysian companies and market trends!