TRI-MODE SYSTEM (M) BERHAD: Navigating Shifting Tides in Q1 2025
Hello fellow investors and market enthusiasts! Today, we’re diving into the latest financial report from TRI-MODE SYSTEM (M) BERHAD for the first quarter ended 31 March 2025. This report offers a crucial glimpse into how one of Malaysia’s key logistics players is performing amidst evolving economic landscapes. While the company managed to sustain its revenue and significantly improve its gross profit margin, a closer look reveals a notable decline in overall profitability, pointing to the challenges ahead. Let’s break down the numbers and understand what this means for the company’s journey forward.
Q1 2025 Performance: A Mixed Bag of Growth and Challenges
TRI-MODE SYSTEM (M) BERHAD reported a mixed performance for the first quarter of 2025 compared to the same period last year. While revenue saw a slight dip, the company demonstrated impressive efficiency in its core operations, leading to a stronger gross profit margin. However, increased expenses weighed heavily on the bottom line.
Key Financial Highlights (Q1 2025 vs. Q1 2024)
Revenue: RM19.25 million
Slightly reduced by 1.11%
Compared to Q1 2024: RM19.47 million
Gross Profit (GP): RM5.04 million
Increased by 17.09%
Compared to Q1 2024: RM4.30 million
Gross Profit Margin: 26.17%
Improved by 4.07 percentage points
Compared to Q1 2024: 22.10%
Profit Before Taxation (PBT): RM0.30 million
Reduced by 49.33%
Compared to Q1 2024: RM0.60 million
Profit After Taxation (PAT): RM0.16 million
Reduced by 60.53%
Compared to Q1 2024: RM0.41 million
Basic Earnings Per Share: 0.10 sen
Reduced from previous year
Compared to Q1 2024: 0.25 sen
The significant improvement in Gross Profit and its margin is a testament to the Group’s operational efficiency. However, the PBT and PAT saw a considerable decline. This was primarily due to a decrease in other incomes, higher depreciation provisions, and increased finance interest expenses. It highlights a common challenge many companies face: while core business operations might be strong, external factors and rising operational costs can erode the final profit.
Comparison with Immediate Preceding Quarter (Q1 2025 vs. Q4 2024)
When comparing the current quarter’s performance to the immediate preceding quarter (Q4 2024), TRI-MODE’s revenue decreased by 10.46% from RM21.50 million to RM19.25 million. This dip is mainly attributed to seasonal factors, as logistics businesses often experience fluctuations during festive periods like Hari Raya and Chinese New Year due to fewer working days. Consequently, PBT also saw a 45.39% reduction, from RM0.55 million to RM0.30 million, influenced by lower other incomes and the aforementioned higher depreciation and finance costs.
Business Unit Performance: Who’s Driving the Bus?
TRI-MODE’s core business revolves around logistics services, and its revenue breakdown by activity provides insights into its operational strengths:
| Business Activity | Q1 2025 Revenue (RM’000) | Q1 2025 % of Total | Q1 2024 Revenue (RM’000) | Q1 2024 % of Total |
|---|---|---|---|---|
| Sea freight | 11,067 | 57.5% | 10,573 | 54.3% |
| Container haulage | 5,368 | 27.9% | 5,765 | 29.6% |
| Warehousing | 1,948 | 10.1% | 2,117 | 10.9% |
| Air freight | 414 | 2.2% | 327 | 1.7% |
| Freight forwarding | 383 | 2.0% | 588 | 3.0% |
| Marine insurance | 70 | 0.4% | 97 | 0.5% |
Sea freight, container haulage, and warehousing remain the top three revenue contributors. Sea freight saw an increase in revenue and its percentage contribution, indicating robust demand in this segment. The company noted that fluctuations in sea freight rates and fuel prices are key factors affecting these segments, which is crucial for investors to monitor given the volatile global logistics environment.
Geographical Footprint
A vast majority of TRI-MODE’s revenue, 91.7%, originates from Malaysia, though this is a slight decrease from 93.7% in Q1 2024. Meanwhile, overseas revenue grew from 6.3% to 8.3%, suggesting a gradual expansion of its international reach or increased activity in existing overseas markets.
Financial Health & Strategic Outlook
Beyond the income statement, the balance sheet and cash flow statements provide a deeper understanding of the company’s financial health and strategic direction.
Balance Sheet Snapshot
As at 31 March 2025, TRI-MODE’s total assets stood at RM172.60 million, a slight decrease from RM178.33 million at the end of 2024. Total equity, however, saw a marginal increase to RM93.79 million from RM93.63 million, leading to a healthy net asset per share of RM0.57 (up from RM0.56). This indicates a stable equity base despite the profit dip.
Cash Flow Dynamics
Cash and cash equivalents decreased by RM2.55 million during the quarter, from RM6.83 million at the start of the year to RM4.28 million. While net cash generated from operating activities was positive at RM0.84 million, it was significantly lower than the RM3.08 million generated in Q1 2024. This reflects the impact of lower profits and changes in working capital. The company also used cash for investing activities (RM0.30 million) and financing activities (RM3.09 million), including repayment of term loans and changes in revolving credit.
The company’s bank borrowings and lease liabilities amounted to RM61.62 million as of 31 March 2025, with a weighted average interest rate of 4.97% per annum. This highlights the impact of finance costs on profitability, especially in a rising interest rate environment.
Future Prospects and Risks: Navigating the Global Headwinds
The management acknowledges a challenging operating landscape for 2025. The International Monetary Fund (IMF) has lowered its estimated 2025 global GDP growth to 2.80% and Malaysia’s projected GDP growth to 4.1%, primarily due to escalating trade tensions and high levels of uncertainty stemming from global economic policies. Bank Negara Malaysia (BNM) also reported a slightly lower first-quarter GDP growth for Malaysia at 4.40%.
Despite these headwinds, TRI-MODE managed to maintain its revenue level and profitability in Q1 2025. The Group is keenly aware of the unfavorable global economic developments and the potential impact of global trade tensions on the national economy. They expect to face a more cautious operating environment throughout 2025.
The company’s long-term growth strategies remain a key focus. They are actively implementing cost management initiatives, improving services, and pursuing strategic capacity expansion. A notable ongoing project is the acquisition of 3 parcels of leasehold industrial lands in PIIP phase 3B for approximately RM42.00 million, intended to expand their warehousing services over the next 3 to 5 years. This project is currently 55% complete, demonstrating their commitment to future growth.
Potential downside risks include higher operating costs due to inflationary pressures, government policy adjustments, and the continuing uncertainty of global trade policies. Nevertheless, the Board expresses its opinion that while the financial year ending 31 December 2025 will be challenging, the Group will cautiously monitor global supply disruptions and continue to seek opportunities in both domestic and international markets to deliver sustainable long-term growth.
Summary and Outlook
TRI-MODE SYSTEM (M) BERHAD’s Q1 2025 report paints a picture of resilience in core operations, with a commendable improvement in gross profit margin despite a slight revenue contraction. This suggests strong operational efficiency and cost management within their primary service lines. However, the notable decline in net profit and earnings per share highlights the pressures from increased depreciation and finance costs, as well as reduced other incomes. The company is clearly operating in a challenging global economic environment, marked by trade tensions and moderated GDP growth forecasts for both the world and Malaysia.
Looking ahead, TRI-MODE’s strategic focus on cost management, service enhancement, and significant capacity expansion in warehousing indicates a proactive approach to navigate these challenges and capitalize on future opportunities. The ongoing land acquisition for warehousing expansion is a strong signal of their commitment to long-term value creation. While the road ahead for 2025 is expected to be challenging, the Group’s efforts to monitor global developments and seek new opportunities position it for sustainable growth in the long run.
Key points from the report:
- Despite a slight revenue dip, Gross Profit margin improved significantly, showcasing operational efficiency.
- Profit Before Tax and Profit After Tax saw substantial declines due to higher depreciation and finance costs.
- Sea freight remains the strongest revenue contributor, with overall business affected by seasonal factors and market volatility.
- The company is actively pursuing strategic capacity expansion, with a significant warehousing project underway.
- Global economic uncertainties and trade tensions are key risks, but management is focused on cost control and seeking new opportunities.
As a Malaysian retail investor, it’s crucial to look beyond just the headline numbers and understand the underlying dynamics. TRI-MODE’s ability to improve its gross margins in a tough environment is commendable, but the pressure on the bottom line from finance costs and other expenses is a factor to watch. Their long-term investment in warehousing capacity could be a game-changer, but it will take time to materialize returns.
What are your thoughts on TRI-MODE’s Q1 2025 performance? Do you think the company’s strategies to expand warehousing and manage costs will be sufficient to overcome the global economic headwinds? Share your views in the comments below!
