Greetings, fellow investors and market watchers! Today, we’re diving into the latest financial report from SMTRACK BERHAD for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into a company that’s actively navigating a period of significant transition and diversification. While the headline numbers present some challenges, there are encouraging signs of strategic shifts and operational improvements that warrant a closer look.
SMTRACK, known for its RFID solutions, has been on an aggressive diversification drive, venturing into sectors like oil and gas (O&G) consultancy, food and beverage (F&B) services and trading, property management and development, and most recently, aviation. This quarter’s report reflects the early impacts of these strategic pivots.
Key Takeaways from Q1 2025:
- A notable reduction in Net Loss, indicating improved operational efficiency despite lower revenue.
- Significant revenue contraction compared to the previous year’s corresponding quarter.
- A remarkable increase in Net Assets Per Share, primarily due to a substantial reduction in the weighted average number of shares in issue.
- Continued focus on diversification into new growth sectors like aviation, health & wellness, and property.
Let’s break down the core figures and what they tell us about SMTRACK’s performance.
Revenue and Profitability Insights
The first quarter of 2025 saw a significant contraction in SMTRACK’s revenue. While this might initially appear concerning, a deeper dive into the profitability figures reveals a more nuanced picture.
Q1 2025
Revenue: RM 881,000
Gross Profit: RM 603,000
Operating Loss: RM (445,000)
Loss Before Taxation: RM (559,000)
Net Loss After Taxation: RM (559,000)
Net Loss Attributable to Owners: RM (481,000)
Q1 2024
Revenue: RM 3,654,000
Gross Profit: RM 2,625,000
Operating Loss: RM (1,178,000)
Loss Before Taxation: RM (1,393,000)
Net Loss After Taxation: RM (1,499,000)
Net Loss Attributable to Owners: RM (1,573,000)
Despite a 75.9% drop in revenue from RM 3.65 million in Q1 2024 to RM 0.88 million in Q1 2025, SMTRACK managed to significantly reduce its net loss. The Net Loss Attributable to Owners improved by a substantial 69.4%, from RM 1.57 million to RM 0.48 million. This suggests that while top-line growth is a challenge, the company has made strides in operational efficiency and cost management. The reduction in administrative expenses from RM 3.91 million to RM 1.05 million is a key factor here, showcasing a leaner operational structure.
Earnings Per Share (EPS) and Net Assets Per Share
This is where the report presents an interesting dynamic, largely influenced by changes in the company’s share base.
Q1 2025
Basic Loss Per Share: (0.22) sen
Weighted Average Shares (‘000): 214,228
Q1 2024
Basic Loss Per Share: (0.13) sen
Weighted Average Shares (‘000): 1,215,529
While the total net loss decreased, the basic loss per share actually worsened from (0.13) sen to (0.22) sen. This counter-intuitive result is due to the drastic reduction in the weighted average number of shares in issue, from 1.22 billion in Q1 2024 to 0.21 billion in Q1 2025. Fewer shares mean each share bears a larger portion of the total loss, even if the total loss has shrunk.
Conversely, this share base reduction has had a positive impact on the Net Assets Per Share (NAPS).
As at 31 March 2025
Net Assets Per Share: RM 0.21
As at 31 December 2024
Net Assets Per Share: RM 0.04
The NAPS saw a significant jump from RM 0.04 as at 31 December 2024 to RM 0.21 as at 31 March 2025. This improvement, again, is largely attributable to the reduced share count. It indicates that the underlying asset value per share has increased for existing shareholders, despite the accumulated losses.
Financial Health: Balance Sheet and Cash Flow
Let’s look at the snapshot of the company’s financial position and its cash movements.
Balance Sheet Snapshot
As at 31 March 2025, SMTRACK’s total assets stood at RM 68.82 million, a slight decrease from RM 69.22 million as at 31 December 2024. Total equity also saw a minor dip to RM 46.02 million from RM 46.58 million. The accumulated losses increased slightly from RM 69.13 million to RM 69.61 million, reflecting the net loss incurred during the quarter.
The company’s borrowings as of 31 March 2025 include non-current borrowings of RM 1.98 million and current borrowings of RM 7.00 million, totaling RM 8.98 million. This indicates a manageable level of debt relative to its total assets.
Cash Flow Dynamics
The cash flow statement provides insights into how the company is generating and using its cash.
Q1 2025
Net Cash from Operating Activities: RM 0
Net Cash Used in Investing Activities: RM (20,000)
Net Cash from Financing Activities: RM (220,000)
Net Decrease in Cash & Equivalents: RM (240,000)
Cash & Equivalents at End of Period: RM (103,000)
Q1 2024
Net Cash from Operating Activities: RM (522,000)
Net Cash Used in Investing Activities: RM (1,841,000)
Net Cash from Financing Activities: RM 3,461,000
Net Increase in Cash & Equivalents: RM 1,098,000
Cash & Equivalents at End of Period: RM 984,000
A significant positive development is the improvement in net cash from operating activities, moving from a deficit of RM 0.52 million in Q1 2024 to breaking even at RM 0 in Q1 2025. This indicates a healthier core business operation. Cash used in investing activities also reduced substantially, reflecting less capital expenditure. However, net cash from financing activities turned negative, leading to an overall net decrease in cash and cash equivalents for the quarter. The company ended the quarter with negative cash and cash equivalents, primarily due to bank overdrafts, which is a point to monitor.
Risks and Prospects: Charting the Future
SMTRACK’s management acknowledges the current challenges but remains optimistic about its strategic direction. The core RFID business continues to be managed with a focus on operational efficiency and cost control to maintain competitiveness. However, the real story lies in the aggressive diversification efforts.
The Group has actively diversified into various new sectors, including health & wellness, property, O&G consultancy, and F&B. These new ventures are reported to have contributed positively to the Group’s revenue. A significant move is the acquisition of a majority stake in an entity involved in the aviation sector, which is expected to enhance future revenue streams. SMTRACK is also developing an application for its air cargo business, targeting commencement soon, with plans to introduce it to other logistics companies for additional income.
Furthermore, the company announced its intention in October 2023 to acquire the remaining 70% equity interest in V Ultimate Sdn Bhd, signaling further expansion plans. The continuous identification of new business opportunities and active acquisition strategies underscore the management’s commitment to expanding its revenue base and reducing reliance on traditional segments.
Summary and
SMTRACK BERHAD’s Q1 2025 report paints a picture of a company in a dynamic transition. While revenue has seen a sharp decline, the significant reduction in net loss indicates improved internal cost management and operational efficiency. The jump in Net Assets Per Share, driven by a reduced share base, is a notable positive for existing shareholders.
The company’s strategic pivot towards diversification into aviation, health & wellness, property, O&G, and F&B sectors is a clear sign of its long-term growth aspirations. These new ventures are already contributing to revenue, and the upcoming air cargo application could provide a new income stream. However, the worsened basic loss per share and the negative cash and cash equivalents at the end of the quarter are points that warrant continued monitoring.
Key points to consider moving forward:
- The ability of the new diversified businesses to scale up and consistently contribute to the top line.
- The success and adoption rate of the new aviation-focused application.
- Management’s continued focus on cost control and improving overall profitability.
- The company’s cash flow generation from operations and its ability to turn cash and cash equivalents positive.
This report highlights SMTRACK’s proactive approach to adapt to market conditions and seek new growth avenues. The journey of diversification is often long and challenging, but the management’s initiatives are clearly laid out.
What are your thoughts on SMTRACK’s diversification strategy? Do you believe these new ventures can truly transform the company’s financial trajectory in the coming quarters? Share your insights in the comments below!
