Kimlun Corporation Berhad’s Q1 2025: A Deep Dive into a Quarter of Remarkable Growth

Hello, fellow retail investors! Today, we’re unboxing the latest quarterly report from Kimlun Corporation Berhad for the first quarter ended 31 March 2025. This report is a fascinating read, showcasing a period of significant expansion and improved profitability. From surging revenues across its key segments to strategic moves in property development, Kimlun has certainly delivered a noteworthy performance. Let’s break down the numbers and understand what’s driving this momentum.

Core Data Highlights: A Quarter of Impressive Gains

Kimlun’s Q1 2025 financial performance has been nothing short of spectacular, demonstrating robust growth across all key metrics when compared to the same period last year. The Group’s strategic initiatives appear to be bearing fruit, leading to substantial improvements in its top and bottom lines.

This represents a remarkable 124.2% increase in revenue. This surge was primarily driven by higher external sales across all active business divisions, signaling strong market demand and operational efficiency.

Gross Profit saw an astounding 266.0% increase. This significant jump is attributed not only to higher revenue but also to better gross profit margins achieved through economies of scale from a higher level of operation.

The Group’s PBT soared by an incredible 2394%, reflecting the strong operational performance and effective cost management relative to the substantial revenue growth.

Correspondingly, PAT experienced a massive 6547% increase, translating directly into improved shareholder value.

This significant leap in EPS underscores the enhanced profitability on a per-share basis, a key indicator for investors.

Segmental Performance: The Engines of Growth

Kimlun’s diversified business segments each played a crucial role in the stellar Q1 performance:

• Construction Division: External revenue increased by 88.2% to RM298.86 million, up from RM158.78 million in Q1 2024. This growth was primarily fueled by a substantial balance order book of RM3.1 billion carried forward from 31 December 2024. The gross profit margin for this segment improved from 4.8% to 6.7%.
• Manufacturing & Trading (M&T) Division: External revenue grew by 27.8% to RM55.62 million, compared to RM43.51 million in Q1 2024. This was largely due to accelerated production and sales of existing orders, supported by increased production capacity following the expansion of its manufacturing plant. The gross profit margin for M&T stood strong at 20.3% (Q1 2024: 18.7%).
• Property Development (PD) Division: This segment saw a multi-fold increase in external revenue, reaching RM105.23 million from just RM2.77 million in Q1 2024. This phenomenal growth (a staggering 3703% increase) was primarily driven by the successful launching and sales of a new development project in Johor Bahru. The gross profit margin for PD improved significantly from a loss of -9.3% to a positive 27.8%, highlighting the profitability of the new project.

Financial Health: A Snapshot of the Balance Sheet and Cash Flow

As of 31 March 2025, Kimlun’s financial position reflects the ongoing expansion:

The increase in total assets and liabilities is consistent with a larger scale of operations and new project ventures. Net assets per share also saw a healthy increase, indicating growth in shareholder equity.

From a cash flow perspective, the Group utilized RM30.16 million in operating activities, a notable improvement from RM39.34 million used in the same period last year. This usage was in line with the working capital requirements of its larger-scale operations and preliminary costs for new projects. Investing activities utilized RM16.21 million, mainly for the acquisition of property, plant, and equipment (PPE) to support ongoing projects. Financing activities generated RM34.46 million, primarily from the utilization of bank facilities for working capital and PPE acquisition.

Risks and Prospects: Navigating the Future Landscape

Kimlun’s management remains optimistic about its prospects, underpinned by a robust order book and a favorable industry outlook. As at 31 March 2025, the Group boasts an estimated construction balance order book of approximately RM2.95 billion and a manufacturing balance order book of RM0.32 billion. This provides excellent earnings visibility, expected to keep the Group busy for the next two to three years.

Key Projects and Market Outlook:

• Ongoing Projects: Significant projects include the SSRL Project (RM0.78 billion, estimated completion 2026), a design and build service apartment project in Johor (RM98.85 million, estimated completion 2026), and various supply orders for IBS components and tunnel lining segments (TLS) for Singapore MRT projects (estimated completion 2026).
• Malaysia Construction Sector: The Board is optimistic about the vibrancy of the Malaysian construction sector in 2025, anticipating tender opportunities from public sector projects such as highway projects in East Malaysia, road upgrading works in Johor, Penang LRT projects, and affordable housing initiatives. Kimlun’s construction arm will also undertake in-house property development projects. The Group will remain selective and cautious in bidding for other private sector projects to mitigate credit risks.
• Singapore Construction Sector: The Building and Construction Authority (BCA) projects total construction demand in Singapore to range between S$47 billion and S$53 billion in 2025, driven by large-scale developments like Changi Airport Terminal 5 (T5) and the Marina Bay Sands Integrated Resort expansion, public housing, and infrastructure works. Kimlun’s subsidiary, SPC Industries Sdn Bhd (“SPC”), with its strong track record in supplying precast components for major Singaporean public sector infrastructure projects, is well-positioned to secure further sales orders.
• Property Development Division: The successful launch of Pinegate Residency Phase 1 (estimated GDV of RM300 million) in January 2025 and Arden Residence (estimated GDV of RM800 million) by its associate company in March 2025 have received encouraging market responses and are expected to contribute positively to the Group’s profit. The Group also plans to submit development planning applications for its land bank this year.

Considerations and Challenges:

While the outlook is bright, the report also indicates some factors that influenced the quarter’s results:

• Increased Operating Expenses: Selling and administrative expenses were higher due to the increased scale of operations and costs associated with new project launches, such as agent commissions and bank charges.
• Higher Finance Costs: Finance costs increased, primarily due to higher utilization of bank facilities to support working capital requirements and PPE acquisitions.
• Working Capital Management: The negative operating cash flow reflects the significant working capital demands of a growing business with larger projects and initial costs for new developments.
• Taxation: The effective tax rate was higher than the statutory rate due to certain expenses being disallowed for tax deduction and unrecognised deferred tax benefits.

Summary and Outlook

Final Thoughts and Your Turn!

Kimlun’s Q1 2025 performance clearly demonstrates the Group’s capacity for strong execution and strategic positioning within the dynamic construction and property sectors. The significant revenue and profit growth, driven by all key segments, is a positive indicator of their operational strength and market responsiveness. While increased expenses and financing costs are part and parcel of growth, the underlying business momentum appears robust.

What are your thoughts on Kimlun’s latest results? Do you believe the ongoing infrastructure projects and property developments will continue to fuel this growth momentum in the coming quarters? Share your insights in the comments section below!

Stay tuned for more deep dives into Malaysian company reports!