Hey there, fellow Malaysian retail investors! It’s that time again when we dive into the latest financial reports to understand how our local companies are faring. Today, we’re taking a closer look at WCE Holdings Berhad’s unaudited interim financial report for the quarter ended 31 March 2025 (4Q FY2025).
This report offers a fascinating glimpse into the journey of a major infrastructure player in Malaysia. While the headline numbers might show continued losses, a deeper dive reveals significant operational improvements and strategic advancements that paint a more optimistic long-term picture. Get ready to explore the impressive revenue surge, the narrowing of losses, and the future prospects of the West Coast Expressway project!
Core Data Highlights: A Closer Look at WCE Holdings’ Performance
WCE Holdings has demonstrated remarkable growth in its latest quarter, especially when compared to the same period last year. Let’s break down the key figures:
Current Quarter (31 Mar 2025)
Revenue: RM 318,128,000
Loss Before Tax: RM (42,913,000)
Loss for the Period Attributable to Owners: RM (13,643,000)
Basic Loss Per Share: (0.44) sen
Preceding Quarter (31 Mar 2024)
Revenue: RM 91,565,000
Loss Before Tax: RM (72,999,000)
Loss for the Period Attributable to Owners: RM (60,759,000)
Basic Loss Per Share: (2.03) sen
As you can see, the revenue for the current quarter surged by a phenomenal 247% to RM 318.1 million compared to RM 91.6 million in the same quarter last year. This is a clear indicator of increased activity and operational progress. While the Group still reported a loss before tax of RM 42.9 million, this is a significant improvement, narrowing by 41% from the RM 73.0 million loss in the preceding year’s corresponding quarter.
For the full financial year ended 31 March 2025 (FY2025), WCE Holdings achieved an Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of RM 98.2 million, a stark contrast to RM 3.8 million in FY2024. This substantial increase in EBITDA signals that the Group is now profitable at an operational level, which is a crucial step towards overall profitability.
Segmental Performance: The Engines of Growth
WCE Holdings’ business is primarily driven by its Concession and Construction segments. Let’s break down their contributions:
Concession Segment
The Concession segment, which includes both construction for the expressway and toll collection, showed mixed but largely positive trends:
- Construction Revenue: For 4Q FY2025, revenue from concession-related construction activities jumped by 164%. This was primarily due to higher construction activity related to the Rest and Service Area (RSA) along the West Coast Expressway.
- Toll Collection Revenue: The Group saw a robust 79% increase in toll collection revenue for 4Q FY2025. This impressive growth is attributed to higher traffic volume following the opening of additional sections (namely Sections 1, 2, and 11).
Overall, the loss before tax for the Concession segment narrowed by 34% quarter-on-quarter, thanks to the combined effect of increased toll collection and ongoing construction activities.
Construction Segment
The Construction segment, primarily undertaken by WCE Maju Sdn. Bhd., experienced an even more dramatic uplift:
- Revenue: Revenue for 4Q FY2025 skyrocketed by an astounding 1879% compared to 4Q FY2024, driven by a significantly higher level of construction activity during the period.
- Profit Before Tax: This segment successfully turned around, reporting a profit before tax of RM 4.8 million in 4Q FY2025, a stark improvement from the RM 2.7 million loss in the previous year’s corresponding quarter.
Financial Status: A Look at the Balance Sheet
Understanding the financial health of WCE Holdings requires a glance at its Statement of Financial Position:
| Category | As At 31 Mar 2025 (RM’000) | As At 31 Mar 2024 (RM’000) |
|---|---|---|
| Total Assets | 7,926,346 | 7,481,881 |
| Total Equity | 846,749 | 895,159 |
| Non-current Liabilities (Loans & Borrowings) | 4,392,459 | 4,297,178 |
| Cash and Bank Balances | 58,962 | 52,841 |
The Group’s total assets have increased, reflecting the ongoing development of the expressway. However, total equity has seen a slight decrease, and non-current liabilities (primarily loans and borrowings) have risen. This is typical for large-scale infrastructure projects that are heavily financed by debt. Cash and bank balances remain healthy, supporting operational needs.
Navigating the Future: Risks and Prospects
WCE Holdings operates in a dynamic environment, balancing significant opportunities with inherent challenges typical of large-scale infrastructure development.
Prospects: The Road Ahead
The future for WCE Holdings appears promising, driven by the continued progress of the West Coast Expressway (WCE) Project:
- Increasing Operational Sections: As of 31 March 2025, 8 out of 11 sections of the WCE are already operational, covering 180 km across Selangor and Perak. Notably, the entire Perak alignment (120 km) is now fully completed. The recent openings of Sections 1, 2, 6, and 11 have significantly boosted traffic.
- Surging Traffic Volume: The sectional average daily traffic has risen by an impressive 93% year-on-year. This has translated into new record toll collections, peaking at RM 0.7 million per day during Chinese New Year in January 2025 and further exceeding this at RM 0.9 million per day during Hari Raya Puasa in April 2025, achieving a new high of 375,000 sectional average daily traffic.
- Long-Term Profitability Outlook: While the Group currently incurs losses due to interest expenses on completed sections (as per MFRS 123, which requires cessation of interest capitalisation once an asset is ready for use), the continued ramp-up in sectional toll revenue is expected to significantly improve financial performance. In the long term, as the full WCE alignment becomes operational, revenue growth is anticipated to outpace financing costs, paving the way for sustained profitability.
- Ongoing Construction Projects: The final three sections (Section 3, Section 4, and Section 7) are currently under construction. WCE Maju Sdn Bhd is also focused on other significant projects, including access to the Seri Langat mixed development, Section 7B of the WCE Project, and ten Rest and Service Areas (RSAs). Successful execution of these projects will further enhance the construction segment’s growth.
- New Financing Secured: Post-quarter end, on 18 April 2025, WCE, an 80%-owned subsidiary, received approval for a Term Loan Facility of up to RM 1,150.00 million from Bank Pembangunan Malaysia Berhad. This facility will be crucial in part-financing the remaining development, design, and construction costs, as well as financing costs for the project.
Risks: Navigating the Challenges
Despite the positive outlook, WCE Holdings faces certain challenges:
- Interest Expenses on Completed Sections: As mentioned, once sections of the highway are completed and operational, the interest expense related to their financing can no longer be capitalised (added to the cost of the asset) but must be expensed in the income statement. This will continue to contribute to losses in the early years of toll operations.
- Real Property Gains Tax (RPGT) Litigation: The Group has a provision of RM 61.7 million for RPGT and penalties related to the disposal of shares in Radiant Pillar Sdn Bhd. While WCE Holdings has appealed and obtained a stay of proceedings, this remains a significant financial and legal risk until resolved.
- Project Completion Risk: The timely completion of the remaining sections of the WCE is crucial for the Group to fully realise its revenue potential and achieve sustained profitability. Delays could impact financial projections.
Summary and
WCE Holdings Berhad’s latest quarterly report paints a picture of a company transitioning from a pure development phase to an operational one. The significant surge in revenue and the positive shift in EBITDA highlight the operational success of the West Coast Expressway as more sections open and traffic volumes increase. This indicates that the core business of toll collection and concession-related construction is gaining strong momentum.
However, it’s important for investors to understand that the accounting treatment for interest expenses on completed sections will continue to result in reported losses in the near term. This is a standard accounting practice for such long-term infrastructure projects and does not necessarily reflect a deterioration in the underlying operational performance. The new term loan facility secured post-quarter end also provides crucial funding for the remaining phases of the project.
Key points to consider for the future:
- Operational Momentum: The increasing traffic volume and toll collection figures are strong indicators of the WCE’s growing utility and revenue generation capability.
- Long-Term Vision: The WCE is a long-term infrastructure asset. Its full potential will be unlocked as all sections become operational and traffic continues to ramp up, eventually leading to sustained profitability.
- Financial Management: The company is actively managing its financing needs, as evidenced by the recent loan facility. However, the RPGT litigation remains a point of attention.
While the Group is not declaring dividends at this stage, which is typical for companies in heavy development phases, the focus remains on completing the project and establishing a strong revenue base for future returns.
Final Thoughts and What’s Next?
WCE Holdings’ journey is a marathon, not a sprint. The latest report clearly shows that the West Coast Expressway is gaining traction, with impressive increases in traffic and revenue. The challenge now lies in managing the financial implications of a maturing infrastructure project, particularly the interest expenses, while pushing for the completion of the remaining sections.
Do you think WCE Holdings can maintain this growth momentum and successfully transition to sustained profitability in the coming years? Share your thoughts in the comments below!
Stay tuned for more analyses of Malaysian companies!
