LAMBO GROUP BERHAD: A Remarkable Turnaround Amidst Strategic Shifts and Lingering Challenges
Greetings, fellow investors! Today, we’re diving into the latest financial report from LAMBO GROUP BERHAD for its second quarter ended 31 March 2025. This report offers a fascinating glimpse into a company undergoing significant transformation, showcasing a powerful return to profitability while navigating considerable market challenges.
The headline? LAMBO Group has successfully swung from a loss-making position to a profitable one, driven by impressive revenue growth. However, a closer look reveals the complexities behind this turnaround, including strategic business realignments and the ongoing task of addressing its Guidance Note 3 (GN3) status.
Core Financial Highlights: A Quarter of Growth
LAMBO Group’s second quarter of fiscal year 2025 (Q2 FY2025) has certainly turned heads with its robust performance compared to the same period last year. Let’s break down the key figures:
Q2 FY2025 (Current Quarter)
Revenue: RM15,669,469
Gross Profit: RM6,931,031
Profit Before Taxation: RM2,691,750
Profit Net of Tax: RM2,093,561
Basic Earnings Per Share: 0.12 sen
Q2 FY2024 (Comparative Quarter)
Revenue: RM4,958,798
Gross Profit: RM1,350,873
Loss Before Taxation: (RM4,884,683)
Loss Net of Tax: (RM4,884,683)
Basic Loss Per Share: (0.32 sen)
As you can see, the growth is nothing short of spectacular. Revenue surged by 216% year-on-year for the quarter, while Gross Profit skyrocketed by 413%. This dramatic improvement propelled the company from a significant loss in Q2 FY2024 to a commendable profit in Q2 FY2025. This turnaround was primarily driven by a substantial increase in revenue, particularly from the retail trading segment, and a favorable shift in the fair value of other investments, which recorded a gain of RM0.92 million this quarter compared to a loss of RM5.61 million in the corresponding quarter last year.
Looking at the cumulative six months ended 31 March 2025, the trend continues positively:
Cumulative Q2 FY2025 (6 Months)
Revenue: RM29,109,340
Gross Profit: RM11,094,720
Profit Before Taxation: RM1,469,602
Profit Net of Tax: RM871,413
Basic Earnings Per Share: 0.04 sen
Cumulative Q2 FY2024 (6 Months)
Revenue: RM13,214,218
Gross Profit: RM3,173,649
Loss Before Taxation: (RM7,760,307)
Loss Net of Tax: (RM7,760,307)
Basic Loss Per Share: (0.50 sen)
Segmental Performance: Retail Leads the Way
A deeper dive into the business segments reveals the engine behind this growth. The Retail segment emerged as a significant contributor, generating the majority of the revenue and delivering a strong profit. This is a notable shift from the previous year, where it recorded a loss.
| Business Segment (Q2 FY2025) | Revenue (RM’000) | Segment Results (RM’000) |
|---|---|---|
| Retail | 12,358 | 2,114 |
| E-Commerce | 2,284 | (469) |
| Logistic | 1,027 | 321 |
| Others | – | 283 |
In contrast, the E-Commerce segment continued to register a loss, although its revenue contribution remains significant. The Logistics segment, however, remained profitable. The “Others” segment also contributed positively to the overall results.
Financial Health: Assets Growing, Liabilities Too
As of 31 March 2025, LAMBO Group’s financial position shows an increase in total assets, reaching RM188.00 million, up from RM175.35 million as at 30 September 2024. This growth is largely attributable to increases in non-current assets like property, plant and equipment, and right-of-use assets, indicating expansion in operational capacity.
However, total liabilities have also seen a significant jump, more than doubling to RM20.91 million from RM10.49 million in September 2024. This is primarily due to higher lease liabilities and an increase in trade and other payables. While increased liabilities can sometimes be a sign of growth, it’s an area to monitor for sustainable financial health.
Cash Flow: A Continued Challenge
Despite the impressive profit turnaround, the company’s cash flow from operations remains negative, recording a net outflow of RM2.51 million for the six months ended 31 March 2025. This indicates that while the company is profitable on paper, it’s still burning cash to fund its operations. Cash and cash equivalents at the end of the period stood at RM3.44 million, a decrease from RM10.54 million at the start of the financial year. This suggests that the company is relying on non-cash gains (like fair value adjustments) and investments to shore up its income statement, while operational cash generation needs improvement.
Risks and Future Prospects: Navigating a Challenging Path
LAMBO Group is not without its challenges. The company has been classified as an Affected Listed Corporation and a Guidance Note 3 (GN3) company since January 2023. This status is triggered when a company faces certain financial distress criteria, and it requires the company to submit a regularisation plan to Bursa Malaysia to address its financial condition. The company has stated its commitment to formulating and submitting a workable plan within the prescribed timeline.
Despite this, LAMBO Group is actively pursuing strategic initiatives to bolster its business:
- Retail Expansion: The company rebranded its Publika restaurant into a café and opened new restaurants in Ascott Hotel and TREC in late 2024, with another TREC outlet planned. This aggressive expansion in the F&B sector aligns with the strong performance of its retail segment.
- E-Commerce & Logistics Enhancement: LAMBO has launched “LamboCellar,” a specialized e-commerce platform for liquor products. Concurrently, it’s expanding its warehousing and logistics capabilities in Petaling Jaya and Klang to support its LamboPlace, LamboMove, and LamboCellar platforms.
While these initiatives are promising, the company acknowledges that the “path to recovery may be challenging” and will adopt a “cautious stance” in its operations. The utilisation of proceeds from past corporate exercises (private placements, rights issue) shows ongoing investment into system enhancements, marketing, and warehousing, with significant balances still to be utilised by June 2025.
Summary and Investment Considerations
LAMBO Group’s Q2 FY2025 report showcases a commendable financial turnaround, primarily driven by strong retail performance and a positive fair value adjustment on investments. The return to profitability and significant revenue growth are certainly positive signals, indicating that the company’s strategic shifts in its business segments are beginning to bear fruit.
However, it’s crucial for investors to consider the broader context. The company’s GN3 status remains a significant overhang, requiring a clear and approved regularisation plan to restore its financial health. The persistent negative operating cash flow, despite improved profitability, also warrants close attention, as sustained positive cash generation is vital for long-term stability.
Key points to consider:
- Profitability vs. Cash Flow: While the income statement shows profit, the cash flow statement indicates continued cash burn from operations.
- GN3 Status: The company’s ability to formulate and execute a successful regularisation plan will be critical for its future.
- Business Expansion: The aggressive expansion in retail and logistics shows ambition, but the success of these ventures will determine future growth.
- Fair Value Adjustments: A significant portion of the profit turnaround was due to non-operating fair value gains, which can be volatile.
- Increased Liabilities: The notable increase in lease liabilities and payables needs careful monitoring.
This quarter’s report presents a mixed bag of strong operational improvements and persistent financial challenges. LAMBO Group is clearly in a period of dynamic change, attempting to pivot and grow its core businesses. The journey ahead will likely be defined by how effectively it manages its cash flow, executes its new business strategies, and addresses its GN3 classification.
What are your thoughts on LAMBO Group’s latest performance? Do you believe their strategic initiatives are enough to overcome the existing challenges and maintain this growth momentum in the coming quarters? Share your insights in the comments below!
