JAKS Resources Berhad: A Q1 2025 Deep Dive – Navigating Revenue Shifts with Strong Profitability
Hello, fellow investors and market watchers! Today, we’re taking a closer look at JAKS Resources Berhad’s unaudited financial results for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into a company that’s successfully steering through a dynamic market environment. While we observe a dip in overall revenue, the standout highlight is a significant improvement in profitability, largely driven by strategic investments and effective cost management. The announcement of a dividend also signals a commitment to shareholder returns. Let’s unpack the numbers and see what’s truly driving JAKS’s performance.
Q1 2025 Financial Performance: A Story of Strategic Profit Growth
JAKS Resources Berhad reported a mixed bag of results in Q1 2025, but the overall picture for profitability is certainly positive. Despite a notable reduction in revenue, the company managed to significantly boost its gross profit and, more importantly, its profit before tax. This demonstrates a strong underlying operational efficiency and the positive impact of its joint venture contributions.
Let’s break down the key figures:
Current Quarter (Q1 2025)
Revenue: RM8,795k
Gross Profit: RM2,069k
Profit Before Taxation: RM10,620k
Net Profit Attributable to Owners: RM15,070k
Basic Earnings Per Share: 0.58 sen
Preceding Year Quarter (Q1 2024)
Revenue: RM14,217k
Gross Loss: (RM1,119)k
Profit Before Taxation: RM7,724k
Net Profit Attributable to Owners: RM12,442k
Basic Earnings Per Share: 0.53 sen
As you can see, revenue for Q1 2025 stood at RM8.8 million, a 38% decrease compared to RM14.2 million in the same quarter last year. This was primarily due to reduced revenue recognition from local construction works as they near completion. However, the Group swung from a gross loss of RM1.1 million in Q1 2024 to a gross profit of RM2.1 million in Q1 2025. This improvement, coupled with a significant contribution from its joint venture, propelled Profit Before Taxation (PBT) to RM10.6 million, a healthy 37% increase from RM7.7 million in the previous corresponding quarter. This positive trend flowed down to the bottom line, with net profit attributable to owners rising to RM15.1 million (up 21%) and Basic Earnings Per Share improving to 0.58 sen from 0.53 sen.
Segmental Performance: A Closer Look
Understanding the performance of each business segment helps us appreciate the diverse contributions to JAKS’s overall results:
* **Construction:** Revenue in this division significantly decreased by 87% to RM0.5 million from RM4.0 million in Q1 2024. This was an expected outcome as local projects are reaching their final stages. Despite the revenue decline, the division managed to reduce its loss before tax by 31%, from RM14.6 million to RM10.2 million, indicating better cost control.
* **Property Investment:** This segment showed modest growth, with revenue increasing by 9% to RM3.5 million from RM3.2 million. This was attributed to additional tenant contributions. The division also saw a reduction in its loss before tax by 7%, moving from RM10.2 million to RM9.4 million.
* **Power-Energy:** Following the commissioning of its 50MW solar photovoltaic project under the Large-Scale Solar (LSS) 4 Programme in August 2023, this division has commenced operations, supplying renewable energy to Tenaga Nasional Berhad (TNB). It contributed revenue of RM4.7 million in Q1 2025. However, it recorded a marginal loss before tax of RM25 thousand, compared to a profit of RM957 thousand in Q1 2024. The report notes that the lower revenue and profit were due to the rainy season during the quarter, affecting solar energy generation.
* **Investment Holding & Others:** This division reported a profit before tax of RM30.3 million, a slight decrease from RM31.6 million in the corresponding quarter last year. This segment notably includes the significant share of profit from the Joint Venture, which contributed RM32.5 million to the Group’s PBT.
Financial Health and Cash Flow Dynamics
As of 31 March 2025, JAKS’s total assets stood at RM2.32 billion, a slight decrease from RM2.36 billion at the end of 2024. Total equity, however, saw a modest increase to RM1.49 billion from RM1.47 billion, contributing to a stable Net Assets Per Share of RM0.60.
On the cash flow front, the Group experienced a net cash outflow from operating activities of (RM14.6 million) in Q1 2025, a shift from a positive inflow of RM2.0 million in the same period last year. This was mainly due to changes in working capital. However, investing activities generated a significant cash inflow of RM13.4 million, largely bolstered by a RM13.3 million dividend received from its Joint Venture. Financing activities saw a higher net outflow of (RM28.3 million), primarily due to loan repayments and dividend payments. Overall, cash and cash equivalents decreased by RM29.4 million during the quarter.
Risks and Prospects: Navigating the Future Landscape
JAKS Resources Berhad is strategically positioning itself to navigate current market challenges and seize future opportunities.
Renewable Energy: A Bright Spot on the Horizon
The Power-Energy division, particularly with its LSS4 solar project, is proving to be a positive contributor to the Group’s revenue and is expected to play a pivotal role in future profitability. JAKS is committed to expanding its renewable energy portfolio through greenfield developments and strategic acquisitions. The Group’s participation in the ongoing LSS5 bidding process further reinforces its dedication to sustainability and long-term value creation. This strategic shift towards renewable energy is anticipated to mitigate the challenges faced by its other traditional segments.
Construction: Tendering for Future Growth
The Construction division continues to operate in a highly competitive environment, exacerbated by global uncertainties such as tariff and trade wars. To counter these headwinds, the division is focusing on securing new projects that offer sufficient margins, balancing risk with reward. It remains proactive in pursuing new construction opportunities through selected tenders and direct proposals to replenish its order book and ensure future growth.
Property Investment: Optimizing Asset Performance
The Property Investment division is concentrating its efforts on maximizing the performance of its existing portfolio. Key initiatives include improving the occupancy rate and rental yield of its properties, particularly Evolve Mall in Ara Damansara and Pacific Tower Business Hub in Section 13, Petaling Jaya. These efforts are aimed at ensuring these assets contribute more significantly to the Group’s overall financial performance.
Dividends: Rewarding Shareholders
JAKS announced a first interim dividend of 0.5 sen per ordinary share for the financial year 2024. This dividend was facilitated through a Dividend Reinvestment Plan (DRP), which saw the issuance and allotment of 19,434,125 new shares at an issue price of RM0.125 per share on 3 March 2025. Additionally, a cash dividend amounting to RM13.0 million was paid, demonstrating the company’s commitment to returning value to its shareholders.
Summary and
JAKS Resources Berhad’s Q1 2025 results paint a picture of a company in transition, successfully leveraging its strategic investments to drive profitability amidst revenue challenges in its traditional segments. The strong performance of its joint venture and the emerging contribution from the Power-Energy division are key highlights. While the Construction division faces a competitive landscape and the Property Investment division focuses on optimization, the Group’s strategic pivot towards renewable energy appears to be a crucial long-term growth driver.
Key points from the report:
- Overall Profit Before Tax increased significantly by 37% due to strong joint venture contributions and improved gross profit margins.
- Revenue declined by 38%, mainly attributed to local construction projects nearing completion and the impact of the rainy season on solar energy generation.
- The Power-Energy division is a new and promising contributor, with plans for expansion and participation in future large-scale solar projects.
- The Group is actively managing its traditional segments by focusing on profitable construction projects and optimizing property portfolio performance.
- A dividend was declared and paid, indicating a commitment to shareholder returns.
The company is clearly focused on building a resilient and sustainable future, with renewable energy at its core. It will be interesting to observe how these strategies unfold in the coming quarters.
Final Thoughts and Engagement
JAKS Resources Berhad’s latest quarterly report offers a compelling narrative of strategic adaptation and resilience. The strong profitability, despite a revenue dip, underscores the importance of diversified income streams and effective cost management. The company’s clear focus on expanding its renewable energy footprint positions it well for future growth in a sector with immense potential.
What are your thoughts on JAKS’s strategic direction? Do you think the Power-Energy division can become the primary growth engine for the Group in the coming years? Share your insights in the comments below!
