mTouche Technology Berhad: Navigating Strategic Shifts Amidst Widening Losses in Q1 2025
Greetings, fellow investors and market watchers! Today, we’re diving into the latest financial report from mTouche Technology Berhad for the quarter ended 31 March 2025. This report offers a glimpse into the company’s performance, revealing a mix of slight revenue growth in certain segments alongside a widening of losses, all while the company undertakes significant strategic re-evaluations, particularly within its healthcare ventures.
One of the most striking aspects of this report is the company’s financial restructuring through a capital reduction, which has significantly altered its equity landscape. While the top-line revenue saw a modest increase, the bottom line tells a story of increasing operational challenges. Let’s unpack the key figures and strategic moves that mTouche is making.
Core Financial Highlights: A Mixed Bag
mTouche Technology Berhad’s first quarter of 2025 presents a nuanced picture. While revenue showed a slight uptick, the company’s loss before tax unfortunately widened. Here’s a closer look at the key performance indicators for the individual quarter ended 31 March 2025, compared to the same period last year:
Current Period Quarter (31.03.2025)
Revenue: RM1,434,000
Loss Before Tax: RM(1,242,000)
Loss for the financial period attributable to Owners of the Company: RM(1,222,000)
Basic Losses Per Share: (0.13) sen
Preceding Year Quarter (31.03.2024)
Revenue: RM1,381,000
Loss Before Tax: RM(746,000)
Loss for the financial period attributable to Owners of the Company: RM(721,000)
Basic Losses Per Share: (0.08) sen
Revenue Growth: The Group’s revenue for the current quarter increased by 3.84% to RM1.43 million, up from RM1.38 million in the preceding year quarter. This growth was primarily driven by higher revenue from messaging content services and ThaiToon apps from its subsidiary, mTouche (Thailand) Co. Ltd.
Widening Losses: Despite the revenue increase, the loss before tax for the quarter significantly widened to RM1.24 million, a 66.48% increase from RM0.75 million in the same period last year. This was mainly attributed to depreciation of property, plant and equipment of RM0.42 million and interest expense of RM0.20 million.
Losses Attributable to Owners: The loss attributable to the owners of the company also saw a substantial increase, widening by 69.49% to RM1.22 million from RM0.72 million in the comparative quarter.
Financial Position: A Balance Sheet in Transition
The balance sheet as of 31 March 2025, compared to 30 September 2024, shows some notable shifts:
| Balance Sheet Item | As at 31.03.2025 (RM’000) | As at 30.09.2024 (RM’000) |
|---|---|---|
| Total Assets | 87,011 | 97,218 |
| Cash and Bank Balances | 45,354 | 50,241 |
| Trade Receivables (net) | 708 | 9,498 |
| Total Equity | 67,459 | 70,303 |
| Share Capital | 39,386 | 242,386 |
| Retained earnings/(Accumulated losses) | 29,259 | (170,756) |
The most significant change in the financial position is the dramatic reduction in Share Capital from RM242.39 million to RM39.39 million. This is a direct result of the capital reduction exercise that took effect on 3 January 2025. Concurrently, the Retained Earnings shifted from accumulated losses of RM170.76 million to positive retained earnings of RM29.26 million, reflecting the impact of this financial restructuring on the company’s reserves.
Cash and bank balances saw a decrease from RM50.24 million to RM45.35 million. Trade receivables also significantly reduced from RM9.50 million to RM0.71 million, which can be a positive sign of improved collection or write-offs of impaired receivables.
Cash Flow: A Challenging Operating Environment
The cash flow statement indicates a challenging period for mTouche. Net cash used in operating activities turned negative, recording RM(3.34) million for the period, a stark contrast to the RM1.42 million generated in the preceding year’s quarter. This shift suggests that the company’s core operations are currently consuming cash rather than generating it. While cash used in investing activities decreased, the overall net decrease in cash and cash equivalents was RM4.57 million for the quarter.
Strategic Pivots: Reassessing the Healthcare Ambition
mTouche’s commentary on prospects reveals a strategic re-evaluation of its healthcare and wellness ambitions. The company had initially planned to develop a health and wellness hub at the Troika KLCC premises, with Phase 1 being a health and wellness centre and Phase 2 a recovery centre. However, due to a slowdown in the healthcare and wellness segment and intensified competition, the company has paused these renovation works.
Instead, mTouche has decided to retain its current fitness business to maintain brand presence and community engagement. Crucially, it has opted to temporarily lease the unutilised space at Troika KLCC to third-party tenants. This interim arrangement aims to optimize premises utilization and generate rental income, supporting financial sustainability while the company reassesses market conditions and refines its long-term development plans.
Summary and
mTouche Technology Berhad’s Q1 2025 report showcases a company in a state of transition. While it managed a slight revenue increase, the widening losses highlight ongoing operational challenges. The significant capital reduction has reshaped its equity structure, aiming to improve its financial appearance by eliminating accumulated losses.
The strategic pause and pivot in the healthcare segment, including the temporary leasing of the Troika KLCC space, reflect a pragmatic approach to market realities. This move could provide much-needed breathing room and a stable, albeit temporary, income stream. However, the shift to negative operating cash flow is a point of concern that warrants close monitoring.
Key points to consider moving forward:
- Healthcare Strategy: The success of the temporary leasing arrangement and the company’s refined long-term plans for its healthcare ventures will be crucial.
- Operational Efficiency: The widening losses and negative operating cash flow indicate a need for improved cost management and operational efficiency to stem the cash burn.
- Market Dynamics: The broader economic headwinds and competitive landscape in the healthcare sector will continue to pose challenges for the company’s strategic adjustments.
- Impact of Capital Reduction: While the capital reduction has cleaned up the balance sheet, the underlying business performance needs to demonstrate a sustainable path to profitability.
What Are Your Thoughts?
mTouche Technology Berhad is clearly navigating a complex environment, making strategic decisions to adapt. What are your thoughts on mTouche’s strategic pivot in the healthcare sector? Do you believe their temporary leasing strategy will provide the necessary breathing room for a long-term turnaround? Share your insights and perspectives in the comments section below!
