Menang Corporation (M) Berhad Q3 FY2025: Navigating Challenges with Strategic Diversification and Shareholder Returns

Greetings, fellow investors! Today, we’re diving into the latest quarterly report from **Menang Corporation (M) Berhad** for the third quarter ended 31 March 2025. This report offers a comprehensive look at the company’s financial health and strategic direction. While the Group experienced some headwinds in its core segments, it continues to demonstrate resilience through strategic diversification and a commitment to rewarding shareholders, highlighted by a recent dividend declaration.

Core Data Highlights: A Closer Look at Performance

Quarter-on-Quarter Performance (Q3 FY2025 vs Q3 FY2024)

Let’s first examine Menang Corporation’s performance for the current quarter compared to the same period last year. While revenue saw a modest increase, profitability metrics experienced a decline primarily due to the absence of a significant one-off income from the prior year.

Revenue for the current quarter increased by 1.69% to RM21.39 million, primarily driven by higher maintenance work. However, gross profit slightly declined by 2.65% due to a reduction in interest income from operating financial assets. The most significant impact was on profit from operations, which decreased by 26.55% to RM12.74 million. This was largely attributed to the absence of a one-off income of RM4.57 million recognized in the corresponding period last year, which was a reversal of an over-accrued liability. Despite a notable reduction in finance costs by RM1.85 million, the overall profit before tax and profit after tax saw declines of 22.94% and 31.69% respectively.

Year-to-Date Performance (9 Months FY2025 vs 9 Months FY2024)

Looking at the cumulative performance over the first nine months of the financial year, similar trends emerge, influenced by the absence of one-off gains and lower property sales.

For the nine-month period, revenue decreased by 7.55% to RM68.65 million, and gross profit by 3.16% to RM45.74 million. This was mainly due to lower revenue from property sales (RM5.50 million decrease) and a reduction in interest income from operating financial assets (RM1.42 million decrease). Profit from operations declined by 15.38% to RM40.52 million, primarily due to the absence of two significant one-off incomes from the previous year: the RM4.57 million over-accrued liability reversal and a RM2.01 million refund from Jabatan Kastam Diraja Malaysia. Despite a substantial reduction in finance costs by RM4.58 million, both profit before tax and profit after tax for the period declined by 9.08% and 14.66% respectively.

Segmental Performance (Q3 FY2025)

A breakdown of the Group’s performance by business segment for the quarter ended 31 March 2025 reveals the key drivers:

The Concession Arrangements segment remains the primary revenue and profit driver for Menang, contributing the vast majority of external revenue and profit before tax. Property Development contributed a modest profit, while Investment Holdings recorded a loss.

Financial Health and Future Outlook

Balance Sheet and Cash Flow Snapshot

As of 31 March 2025, Menang Corporation’s total assets stood at RM969.49 million, a decrease from RM1,030.73 million as of 30 June 2024. This reduction was mirrored by a significant decrease in total liabilities from RM482.84 million to RM375.11 million, mainly driven by scheduled repayments of loans and borrowings and a reduction in trade and other payables. Total equity, however, increased to RM594.38 million from RM547.89 million, indicating a stronger equity base. The net assets per share, however, decreased to RM0.67 from RM0.76, likely influenced by the increase in share capital from the exercise of warrants and treasury share repurchases.

From a cash flow perspective, net cash from operating activities for the nine-month period decreased to RM70.32 million from RM143.77 million in the previous corresponding period. The company also saw increased net cash used in financing activities, primarily due to dividend payments and treasury share repurchases, leading to a net decrease in cash and cash equivalents of RM32.62 million for the period.

Strategic Risks and Prospects

Menang Corporation remains optimistic about its future, focusing on sustainable growth and strategic diversification. The company is actively expanding its business horizons:

• **Healthcare and Wellness:** Through its collaboration with Alpro Alliance Sdn. Bhd., Menang is venturing into the burgeoning retail pharmacy sector in Indonesia, a move that could open up new revenue streams and reduce reliance on traditional segments.
• **Property Development:** The Menang Point project in Telok Kemang, Port Dickson, is progressing, albeit with some delays. Furthermore, the Group is actively evaluating new projects with potential development partners, signaling a continued commitment to this segment.

While the absence of significant one-off gains affected current period profitability, the reduction in finance costs due to lower outstanding loan balances is a positive sign of improved financial management. The Group’s total borrowings have decreased due to scheduled repayments, and its weighted average interest rate stands at 6.00% on floating rate loans, indicating a manageable debt profile.

What are your thoughts on Menang Corporation’s latest report? Do you believe their diversification strategy into healthcare will be a significant growth driver in the coming years? Share your insights in the comments section below!