Tong Herr Resources Berhad (THRB) has just released its unaudited interim financial report for the first quarter ended 31 March 2025, and it paints a picture of robust growth despite a challenging global economic landscape. The company, a prominent player in the manufacturing sector, particularly known for its stainless steel fasteners and aluminium products, has demonstrated impressive resilience and strategic focus in its latest performance.
The core message from this report is clear: THRB has achieved significant revenue and profit growth, largely propelled by its Fasteners segment. This positive momentum is further underscored by a substantial increase in profit attributable to owners, and the company’s intention to propose a final dividend for the previous financial year. But what exactly is driving this impressive performance, and what challenges might lie ahead for this Malaysian industrial powerhouse?
Q1 2025 Performance Highlights: A Strong Start to the Year
THRB’s first quarter results show a considerable uplift across key financial metrics when compared to the same period last year. This indicates a strong operational execution and demand for its core products.
Q1 2025 (RM’000)
Revenue: 153,750
Gross Profit: 11,945
Profit Before Tax: 7,873
Profit After Tax: 6,955
Profit Attributable to Owners: 6,007
Basic Earnings Per Share (sen): 3.91
Q1 2024 (RM’000)
Revenue: 130,845
Gross Profit: 8,026
Profit Before Tax: 5,997
Profit After Tax: 4,505
Profit Attributable to Owners: 2,840
Basic Earnings Per Share (sen): 1.85
The numbers speak volumes: Revenue surged by 17.51%, while Gross Profit saw an even more impressive jump of 48.83%. This significant improvement in gross profit margin, from 6.13% to 7.77%, was primarily due to increased sales volume while the cost of sales remained relatively constant. Profit attributable to owners of the company more than doubled, soaring by 111.49% to RM6.01 million, leading to a healthy basic earnings per share of 3.91 sen.
Diving Deeper: Segmental Strength and Geographical Reach
A closer look at THRB’s operating segments reveals the primary driver behind this stellar performance:
| Segment (RM’000) | Q1 2025 Revenue | Q1 2024 Revenue | Q1 2025 Segment Profit | Q1 2024 Segment Profit/(Loss) |
|---|---|---|---|---|
| Stainless Steel Fasteners | 119,671 | 91,461 | 5,077 | 1,190 |
| Aluminium and related products | 34,079 | 39,384 | 1,869 | 3,338 |
The Stainless Steel Fasteners segment was the clear growth engine, with revenue increasing significantly and segment profit quadrupling. This robust performance in fasteners was the main contributor to the Group’s overall higher revenue. In contrast, the Aluminium and related products segment experienced a decline in both revenue and segment profit, highlighting the varied performance across the company’s business units.
Geographically, the United States of America (RM51.00 million) and Taiwan (RM29.75 million) emerged as key contributors to external revenue, both showing substantial growth compared to the previous year. Revenue from Malaysia, however, saw a slight decrease.
Momentum from the Previous Quarter
Comparing the current quarter (Q1 2025) with the immediate preceding quarter (Q4 2024) also shows positive sequential growth in key areas:
Q1 2025 (RM’000)
Revenue: 153,750
Profit Before Tax: 7,873
Profit After Tax: 6,955
Profit Attributable to Owners: 6,007
Q4 2024 (RM’000)
Revenue: 140,051
Profit Before Tax: 6,542
Profit After Tax: 7,276
Profit Attributable to Owners: 6,726
Revenue increased by 9.79% and Profit Before Tax (PBT) rose by 20.35% from the immediate preceding quarter. This was again mainly driven by the increased sales volume from the Fasteners segment. While the PBT saw a healthy increase, it’s worth noting that Profit After Tax (PAT) and profit attributable to owners saw a slight dip compared to the previous quarter. This could be influenced by various factors, including tax provisions for the quarter, but the underlying operational profit before tax remains strong.
A Look at the Balance Sheet and Financial Health
THRB’s financial position remains robust, though there are some shifts to observe. Segment assets have increased, reflecting the company’s growth. However, short-term borrowings have seen a notable increase, rising from RM16.25 million in Q1 2024 to RM65.79 million in Q1 2025. A significant portion of these borrowings is denominated in US Dollars, which exposes the company to foreign exchange rate fluctuations. While this is a common practice for companies involved in international trade, it’s an area to monitor. The company also continues to provide financial guarantees to financial institutions for credit facilities granted to its subsidiaries, though this amount has slightly decreased.
Navigating the Headwinds: Prospects and Challenges
THRB acknowledges the ongoing market volatility and challenges. The company remains committed to delivering sustainable long-term value, underpinned by its strong financial fundamentals and prudent cash and financial management. However, the Board is vigilant regarding several external factors:
- Continuing geopolitical tensions.
- Trade tariffs.
- Instability in the global financial markets.
- Dampening of business and consumer confidence.
Despite these headwinds, the company’s strategy revolves around continuous vigilance and navigation through the challenging economic landscape. This proactive approach suggests a focus on maintaining stability and seeking opportunities amidst the uncertainties.
Summary and
Tong Herr Resources Berhad has kicked off fiscal year 2025 with an impressive first quarter, showcasing strong revenue and profit growth primarily driven by its Stainless Steel Fasteners segment. The significant increase in profit attributable to owners and improved gross profit margins are testaments to the company’s operational efficiency and market demand for its core products. While the Aluminium segment faced headwinds and short-term borrowings have increased, the overall financial performance appears solid, backed by strong fundamentals and prudent management.
Looking ahead, THRB faces a complex global environment marked by geopolitical tensions and economic uncertainties. However, the company’s commitment to sustainable value creation and its proactive stance in navigating these challenges suggest a resilient outlook. The proposed dividend for FY2024, though not yet approved, also reflects a commitment to shareholder returns.
Key points to consider:
- The strong performance of the Fasteners segment is a significant positive, but the Aluminium segment’s decline bears watching.
- The increase in short-term borrowings, particularly USD-denominated, warrants attention regarding foreign exchange exposure and financing costs.
- The company’s ability to maintain growth momentum amidst global market volatility, geopolitical tensions, and trade tariffs will be crucial.
- Management’s stated vigilance and prudent financial management will be key to navigating potential challenges.
THRB’s Q1 performance is undoubtedly impressive, showcasing resilience and strategic focus on its core Fasteners business. The significant increase in attributable profit is particularly noteworthy. However, the rise in short-term borrowings and the challenging global economic environment are factors for investors to monitor closely.
What are your thoughts on THRB’s strategy for navigating these global uncertainties? Do you believe the growth in the Fasteners segment can continue to offset the headwinds from the Aluminium segment and broader global challenges? Share your views in the comments section below!
