Reservoir Link Energy Bhd’s Q3 FY2025: Navigating Energy Transitions with Strategic Moves
Greetings, fellow investors! Today, we’re diving into the latest interim financial report from Reservoir Link Energy Bhd (RLEB) for its third quarter ended 31 March 2025. This report offers a fascinating glimpse into a company that’s actively navigating the evolving energy landscape, balancing its traditional oil and gas roots with an expanding footprint in renewable energy. While the quarter saw some shifts in revenue, the cumulative performance highlights a significant strategic gain that’s set to reshape the company’s future. Let’s unpack the numbers and the strategic plays that are defining RLEB’s journey.
Core Financial Highlights: A Tale of Two Periods
Reservoir Link Energy’s latest financial report presents a mixed picture when comparing the individual quarter against the cumulative year-to-date performance. Understanding the nuances is key to appreciating the company’s trajectory.
Quarterly Performance (Q3 FY2025 vs. Q3 FY2024)
For the three months ended 31 March 2025, the Group reported a decline in revenue and an increased net loss compared to the same period last year. This was largely influenced by changes in its renewable energy segment’s consolidation.
Q3 FY2025 (3 Months Ended 31.03.2025)
Revenue: RM22.18 million
Gross Profit: RM5.47 million
Net Loss After Tax: RM(2.46) million
Basic Loss Per Share: (0.78) sen
Q3 FY2024 (3 Months Ended 31.03.2024)
Revenue: RM30.23 million
Gross Profit: RM3.57 million
Net Loss After Tax: RM(2.15) million
Basic Loss Per Share: (0.61) sen
The Group’s revenue decreased by RM8.0 million, or 27%, primarily due to a RM16.3 million reduction in the renewable energy EPCC (Engineering, Procurement, Construction, and Commissioning) segment. This was a direct result of the Group consolidating Founder Group Limited (FGL) only until 23 October 2024, after FGL’s listing on NASDAQ diluted Reservoir Link’s shareholding from 51% to 45%. Despite the overall revenue decline, the oil and gas segment saw an increase of RM5.1 million, and the water treatment plant segment added RM2.5 million, showcasing resilience in these areas. The loss before taxation improved by RM0.7 million, driven by profits from the oil and gas segment.
Cumulative Performance (9 Months Ended 31.03.2025 vs. 31.03.2024)
Looking at the nine-month period, a different and much more positive trend emerges, largely thanks to a significant non-operating gain.
CYTD FY2025 (9 Months Ended 31.03.2025)
Revenue: RM99.81 million
Gross Profit: RM18.98 million
Net Profit After Tax: RM82.24 million
Basic Earnings Per Share: 24.78 sen
PYTD FY2024 (9 Months Ended 31.03.2024)
Revenue: RM142.57 million
Gross Profit: RM19.93 million
Net Profit After Tax: RM1.79 million
Basic Loss Per Share: (0.11) sen
While cumulative revenue decreased by 30% (RM42.8 million) for similar reasons related to FGL’s deconsolidation, the Group’s profit before taxation surged by over 100% to RM84.64 million. This remarkable increase was primarily due to a fair value adjustment of RM84.7 million on the investment in FGL, which is now classified as an associate company. This re-measurement reflects the value unlocked by FGL’s successful NASDAQ listing.
Strengthening Financial Health
Beyond the income statement, Reservoir Link Energy has also significantly improved its financial position, showing stronger asset backing and reduced liabilities.
As At 31 March 2025
Total Assets: RM247.23 million
Total Equity: RM171.48 million
Total Liabilities: RM75.74 million
Net Asset Per Share: RM0.52
Net Cash from Operating Activities (9 months): RM3.81 million
As At 30 June 2024 (Audited)
Total Assets: RM231.71 million
Total Equity: RM93.68 million
Total Liabilities: RM138.03 million
Net Asset Per Share: RM0.30
Net Cash for Operating Activities (9 months): RM(19.03) million
The balance sheet shows a robust improvement, with total equity almost doubling and total liabilities significantly decreasing. This shift is a positive indicator of the company’s financial stability and efficiency in managing its obligations. Furthermore, the nine-month period saw a commendable turnaround in cash flow from operations, moving from a negative outflow to a positive inflow of RM3.81 million, which is crucial for funding ongoing and future projects.
Strategic Outlook: Positioning for Future Growth
Reservoir Link Energy is not just about the numbers; it’s about strategic positioning in a dynamic energy market. The company is actively pursuing opportunities in both traditional oil and gas and the burgeoning renewable energy sector.
Oil & Gas Sector: Decommissioning and Strategic Acquisitions
Malaysia’s oil and gas upstream services segment is projected to have a stable outlook, with crude oil prices anticipated to remain between US$70-US$80 per barrel. This stability supports continued activity, including a slight rise in drilling in 2025 and significant plugging and abandonment (P&A) activities from 2026 onwards. Reservoir Link, with its proven well intervention expertise, is actively participating in these decommissioning tenders, aiming to secure a substantial portion of the upcoming work.
A key strategic move was the acquisition of a 30% equity stake in Propel Maxflo Sdn Bhd on 2 May 2025. This investment is designed to strengthen Reservoir Link’s position across Malaysia’s oil and gas value chain and unlock synergistic opportunities.
Renewable Energy Sector: Aligning with National Goals
Malaysia’s commitment to sustainable energy, as outlined in its Renewable Energy Roadmap (MyRER) and National Energy Transition Roadmap (NETR), provides a strong tailwind for companies like Reservoir Link. With ambitious targets of 31% renewable energy by 2025, 40% by 2035, and eventually 70% by 2050, the sector offers significant growth potential.
Reservoir Link’s involvement as a solar power producer under the Corporate Green Power Programme (CGPP) and its potential participation in the Large Scale Solar (LSS PETRA) competitive bidding process, which offers 2,000 MW of capacity, underscore its strategic alignment with these national goals. These initiatives are expected to open new avenues and bolster the company’s revenue streams in sustainable energy.
Founder Group Limited (FGL) NASDAQ Listing: A Strategic Shift
The successful listing of FGL, Reservoir Link’s former 51%-owned subsidiary, on NASDAQ on 23 October 2024 was a pivotal event. While this diluted Reservoir Link’s shareholding to 45.21% (and further to 39.2% / 43.31% after warrant exercises), making FGL an associate company, it is a strategic move. The NASDAQ listing is expected to enhance FGL’s access to capital and broaden its investor base, supporting its expansion in the solar renewable energy sector. Although Reservoir Link will now equity account for FGL’s financial results, it is well-positioned to benefit from FGL’s growth through increased corporate visibility and financial flexibility.
Summary and
Reservoir Link Energy Bhd’s third-quarter report for FY2025 reveals a company undergoing a significant transformation. While the individual quarter showed a revenue decline and increased loss, primarily due to the strategic reclassification of FGL, the cumulative year-to-date performance shines with a substantial profit surge driven by the re-measurement of its FGL investment. This highlights the company’s ability to unlock value from its strategic initiatives.
The Group’s balance sheet has significantly strengthened, demonstrating improved financial health and a positive shift in cash flow from operations. Looking ahead, Reservoir Link is well-positioned to capitalize on both the stable outlook in the oil and gas decommissioning segment and the ambitious growth targets in Malaysia’s renewable energy sector. Its recent acquisition of a stake in Propel Maxflo and its participation in key solar programs like CGPP and LSS PETRA are clear indicators of its commitment to expanding its energy portfolio.
Key points from the report that shape the outlook:
- The significant one-off gain from the re-measurement of the FGL investment underscores the value creation from its strategic NASDAQ listing.
- Resilience in the traditional oil and gas segment, particularly with opportunities in decommissioning.
- Strong alignment with Malaysia’s national renewable energy roadmap, presenting substantial long-term growth avenues.
- Improved financial health, marked by increased equity and reduced liabilities, providing a more stable foundation for future endeavors.
- The focus on securing new tenders in both O&G and RE sectors indicates a proactive approach to sustained growth.
What’s Next for Reservoir Link Energy?
Reservoir Link Energy Bhd is at a pivotal juncture, strategically positioning itself to ride the waves of both traditional and new energy demands. The shift in FGL’s status, while impacting quarterly revenue consolidation, has clearly unlocked significant value on the balance sheet and through cumulative profits. The company’s proactive approach in securing new projects and making strategic acquisitions in both O&G and RE sectors suggests a focused path towards sustained growth.
Do you think Reservoir Link Energy can successfully balance its traditional O&G services with its ambitious renewable energy expansion? Share your thoughts in the comments below!
For more insights into Malaysian companies navigating the energy transition, explore our other analyses on related articles.
