Oriental Holdings Berhad Navigates a Dynamic Quarter: Revenue Up, But Profits Face Headwinds
Malaysian retail investors, let’s dive into the latest financial report from Oriental Holdings Berhad for the quarter ended 31 March 2025. This report offers a fascinating look into a diversified conglomerate facing a complex market landscape. While the company saw a commendable increase in revenue, its profitability took a significant hit compared to the same period last year, largely due to the absence of a substantial one-off gain recorded previously and the impact of foreign exchange movements. Despite these challenges, the Board has recommended a final dividend, signaling a continued commitment to shareholder returns. Let’s unpack the details and understand what’s driving these numbers.
Q1 FY2025 Financial Performance: A Mixed Bag
Oriental Holdings Berhad reported a robust increase in revenue for the first quarter of 2025, but the profit figures tell a different story when compared to the previous year. Here’s a snapshot:
Q1 FY2025
Revenue: RM 1,412.9 million
Operating Profit: RM 123.8 million
Profit Before Tax: RM 128.4 million
Profit from Continuing Operations: RM 94.7 million
Profit Attributable to Stockholders: RM 90.9 million
Basic Earnings per Stock: 14.65 sen
Q1 FY2024
Revenue: RM 1,189.3 million
Operating Profit: RM 427.6 million
Profit Before Tax: RM 413.4 million
Profit from Continuing Operations: RM 327.9 million
Profit Attributable to Stockholders: RM 319.5 million
Basic Earnings per Stock: 51.50 sen
Revenue for Q1 FY2025 increased by 18.8% to RM 1,412.9 million compared to RM 1,189.3 million in Q1 FY2024. This growth was primarily fueled by stronger contributions from the plantation segment, driven by higher commodity prices and volumes, as well as an improved performance from the automotive segment, particularly its retail operations in Singapore.
However, operating profit saw a significant decline of 71.0% to RM 123.8 million (Q1 FY2024: RM 427.6 million), and profit before tax decreased by 68.9% to RM 128.4 million (Q1 FY2024: RM 413.4 million). This sharp drop is largely attributed to lower operating profits across most business segments, and crucially, the absence of a substantial gain on disposal of Bayview Eden Melbourne Hotel in Australia (RM 209.8 million) which was recorded in Q1 FY2024.
Segmental Performance Analysis (Q1 FY2025 vs Q1 FY2024)
- Automotive: Revenue rose by 14.8% to RM 800.9 million, but operating profit decreased by 13.6% to RM 53.9 million. Singapore retail operations saw a 57.8% revenue increase due to higher car sales (up 91.6%) driven by consistent rises in Certificate of Entitlement (COE) quotas. However, operating profit was impacted by lower gross profit margins due to high COE prices. Malaysian retail operations reported slightly higher revenue and operating profit, supported by increased car sales (up 5.1%) for Civic, City, and BYD models.
- Plantation: This segment was a strong performer, with revenue soaring by 92.1% to RM 338.9 million. This was due to higher selling prices for Fresh Fruit Bunches (FFB), Crude Palm Oil (CPO), and Palm Kernel (PK), along with a 78.0% increase in CPO volume. Despite the revenue surge, operating profit decreased to RM 61.8 million (Q1 FY2024: RM 66.1 million) due to realised and unrealised foreign exchange losses of RM 59.1 million on Indonesian Rupiah (IDR) denominated borrowings against CHF and JPY.
- Plastic: Revenue declined by 14.2% to RM 62.9 million, and operating profit fell by 47.7% to RM 4.6 million. This was attributed to lower sales orders from domestic automotive customers, impacted by the phasing out of a current model and competition from China car models.
- Hotels and Resorts: Revenue decreased by 17.9% to RM 64.7 million, and operating profit saw a significant drop to RM 19.5 million (Q1 FY2024: RM 242.4 million). The revenue decrease was due to lower average occupancy and room rates, particularly in Australia, Singapore, and UK hotels. The substantial profit decline is primarily due to the absence of the RM 209.8 million gain from the disposal of Bayview Eden Melbourne Hotel in Q1 FY2024. Excluding this one-off gain, operating profit still decreased by 40.2%.
- Investment Holding: Revenue decreased by 8.3% to RM 1.1 million, leading to an operating loss of RM 22.2 million (Q1 FY2024: operating profit of RM 31.3 million). Lower dividend income and realised and unrealised foreign exchange losses of RM 20.9 million on USD denominated borrowings against JPY, SGD, and CHF were key factors.
- Investment Properties & Trading of Building Material Products: Revenue decreased by 14.9% to RM 110.6 million, with operating profit falling to RM 0.4 million (Q1 FY2024: RM 11.8 million), in tandem with lower sales volume and reduced economies of scale.
- Healthcare: This segment showed positive growth, with revenue increasing by 5.6% to RM 33.9 million and operating profit rising to RM 5.7 million (Q1 FY2024: RM 4.9 million), mainly due to higher interest income from fund placements.
Quarter-on-Quarter Performance (Q1 FY2025 vs Q4 FY2024)
Comparing the current quarter to the immediate preceding quarter (Q4 FY2024), the Group’s revenue marginally decreased by 1.2% to RM 1,412.9 million. Operating profit decreased by 32.8% to RM 123.8 million (Q4 FY2024: RM 184.3 million), and profit before tax decreased by 28.7% to RM 128.4 million (Q4 FY2024: RM 180.2 million).
- Automotive: Revenue decreased by 4.0% with operating profit down by 36.2%, mainly due to lower car sales in Malaysia and reduced gross profit margins in Singapore.
- Plantation: Revenue increased by 22.1% due to higher CPO sales volume and selling prices. However, operating profit was lower due to significant foreign exchange losses.
- Plastic: Revenue and operating profit decreased due to lower sales orders from domestic automotive customers, impacted by EV influx and slow new model launches.
- Hotels and Resorts: Revenue and operating profit declined due to lower occupancy and room rates during the off-peak season, especially in Australia and UK.
- Investment Holding: Revenue decreased significantly, leading to an operating loss, primarily due to lower dividend income and substantial foreign exchange losses.
- Investment Properties & Trading of Building Material Products: Revenue decreased slightly. However, the segment saw a turnaround to an operating profit of RM 0.4 million (Q4 FY2024: operating loss of RM 94.1 million), mainly because there was no additional impairment loss provision for investment properties in Australia and reclaimed land in Melaka in Q1 FY2025.
- Healthcare: Revenue and operating profit decreased due to fewer operation theatre cases and a lower number of patients.
Financial Health Check
As at 31 March 2025, Oriental Holdings Berhad maintained a strong financial position:
| Indicator | 31 March 2025 (RM’000) | 31 December 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Total Assets | 11,597,655 | 11,557,753 | 0.3% |
| Total Equity | 8,043,222 | 8,002,459 | 0.5% |
| Total Liabilities | 3,554,433 | 3,555,294 | 0.0% |
| Net Assets per Stock (sen) | 1217.43 | 1211.14 | 0.5% |
The Group’s net assets per stock saw a slight increase, reflecting a stable equity base. Cash and cash equivalents stood at RM 3,234.6 million at the end of the quarter, indicating healthy liquidity.
Navigating the Future: Risks and Prospects
The report acknowledges a challenging global economic outlook, with the International Monetary Fund (IMF) cutting global growth projections. However, Oriental Holdings Berhad is actively strategizing across its diverse segments:
- Automotive: The industry is undergoing rapid transformation with electrification and autonomous vehicles. The company is aligning with Honda Motor’s EV push, with the recent launch of Honda e:N1 in Malaysia. Management will continue to enhance sales and after-sales services with strong promotional campaigns. In Singapore, COE prices are on an upward trend, but additional COEs are expected to be injected progressively, which could impact the market.
- Plastic: This segment faces intense competition, especially with the influx of electric vehicles (EVs) and slow progress in new model launches from customers. The management plans to focus on cost rationalisation and productivity improvement to stay competitive.
- Plantation: Commodity prices remain a key determinant of profitability. The management is committed to ensuring estates and mills remain efficient, cost-effective, and competitive. Close monitoring and management of foreign exchange exposure on borrowings are also crucial.
- Hotels and Resorts: While international tourism arrivals are expected to grow, the segment is committed to elevating guest experiences, sustaining competitive pricing, and delivering exceptional service to strengthen its market position amidst a dynamic travel industry landscape.
- Healthcare: The focus remains on strengthening brand awareness and positioning the hospital for sustainable growth.
A notable risk highlighted across several segments is the impact of foreign exchange fluctuations, particularly the weakening of IDR and USD against CHF, JPY, and SGD, which resulted in significant realised and unrealised foreign exchange losses in Q1 FY2025. This will require careful monitoring and hedging strategies.
The company also announced a Memorandum of Understanding with LBS Bina Group Berhad to develop approximately 561 acres of land in Klebang, Melaka, into a mixed industrial and commercial development. This joint venture for a 15-year period signifies a strategic move to unlock value from its property assets and diversify revenue streams.
Summary and Outlook
Oriental Holdings Berhad’s Q1 FY2025 report presents a nuanced picture. The Group demonstrated strong revenue growth, primarily driven by its automotive and plantation segments, showcasing resilience in its core businesses. However, the absence of a significant one-off gain from the previous year, coupled with substantial foreign exchange losses, led to a notable decline in overall profitability. The company’s diversified portfolio, coupled with strategic initiatives like the Melaka land development and continued focus on operational efficiency across segments, positions it to navigate current market headwinds.
Key points from this report include:
- Robust revenue growth, indicating strong underlying business activity.
- Significant profit decline primarily due to the absence of a one-off asset disposal gain from the previous year.
- Impact of foreign exchange losses on profitability, particularly in the plantation and investment holding segments.
- Strategic moves in property development and continued focus on EV adoption in the automotive sector.
- Proposed final dividend reflecting a commitment to shareholder returns despite the challenging quarter.
The management’s emphasis on improving efficiency, managing costs, and seeking synergistic business opportunities suggests a proactive approach to future growth. While the road ahead may involve challenges, particularly from currency volatility and competitive pressures, the company’s diversified operations and strategic initiatives could help it adapt and thrive.
From a professional standpoint, this report highlights the importance of looking beyond headline numbers. While the profit dip might initially seem concerning, understanding the underlying factors—especially the absence of a non-recurring gain and the impact of forex—provides a clearer picture. The core businesses, particularly automotive and plantation, continue to show strength in revenue generation, which is a positive sign. The strategic property development joint venture is also an interesting move that could unlock long-term value.
What are your thoughts on Oriental Holdings Berhad’s performance this quarter? Do you believe their diversified portfolio and strategic initiatives will be enough to overcome the current market challenges and maintain growth momentum in the coming years? Share your insights in the comments below!
