Curious about how Malaysian companies are navigating the current economic landscape and positioning themselves for future growth? Citaglobal Berhad, a diversified group with interests in Energy, Civil Engineering and Construction, Property, and Manufacturing, has just released its interim financial report for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into the company’s performance, highlighting both challenges and strategic advancements.
While the quarter saw a slight dip in overall revenue and pre-tax profit compared to the same period last year, Citaglobal managed to deliver a significant surge in net profit, propelled by strategic initiatives and a notable one-off gain. The company also announced dividends for the previous financial year, reflecting its commitment to shareholder returns. Let’s dive into the details to understand the key drivers behind these numbers and what they mean for Citaglobal’s trajectory.
Core Financial Highlights: A Mixed Yet Promising Quarter
Citaglobal’s first quarter of 2025 presented a mixed financial picture. While revenue experienced a minor decline and pre-tax profit saw a reduction, the company’s net profit surged impressively, demonstrating resilience and the impact of strategic adjustments.
Q1 2025
Revenue: RM74.78 million
Profit Before Taxation: RM4.15 million
Net Profit: RM2.97 million
Basic Earnings Per Share: 0.71 sen
Q1 2024
Revenue: RM78.07 million
Profit Before Taxation: RM4.64 million
Net Profit: RM2.12 million
Basic Earnings Per Share: 0.52 sen
Here’s a breakdown of the key performance indicators:
- Revenue: The Group reported a revenue of RM74.78 million for Q1 2025, a 4% decrease from RM78.07 million in the corresponding quarter of the previous year. This dip was primarily due to lower contributions from the Civil Engineering and Construction (CEC), Property, and Manufacturing segments. However, this was partially offset by higher revenues from the Energy and Telecommunications divisions, indicating a shift in revenue mix.
- Profit Before Taxation (PBT): PBT for the quarter stood at RM4.15 million, an 11% decline from RM4.64 million in Q1 2024. The reduction was mainly attributed to a lower performance from the CEC segment.
- Net Profit: Despite the lower PBT, Citaglobal’s net profit for the period soared by a remarkable 40% to RM2.97 million, up from RM2.12 million in Q1 2024. This significant improvement was largely driven by a substantial increase in the share of results from joint ventures and associates, coupled with a one-off gain of RM1.4 million from the deemed disposal of Citaglobal Energy Sdn Bhd (CGE).
- Earnings Per Share (EPS): Reflecting the strong net profit growth, basic earnings per share rose by 37% to 0.71 sen from 0.52 sen in the prior year’s corresponding quarter.
Comparing the current quarter’s performance against the immediate preceding quarter (Q4 2024), both revenue and profit before taxation experienced a decline. Revenue decreased by RM21.6 million, and PBT dropped by RM6.2 million. This was largely influenced by lower contributions across most segments, though the Energy and “remaining segments” (bolstered by associate contributions) showed improved results.
Segmental Performance Overview
Understanding the performance of each business unit provides a deeper insight into Citaglobal’s operational dynamics. Here’s how the various segments contributed to the revenue in Q1 2025 compared to Q1 2024:
| Segment | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Change (RM’000) | Change (%) |
|---|---|---|---|---|
| Energy | 8,801 | 1,291 | 7,510 | 582% |
| Civil Engineering & Construction | 40,622 | 49,822 | (9,200) | -18% |
| Property | 8,535 | 12,735 | (4,200) | -33% |
| Manufacturing | 9,732 | 9,932 | (200) | -2% |
| Others (including Telecommunications) | 7,092 | 4,292 | 2,800 | 65% |
| Total | 74,782 | 78,074 | (3,292) | -4% |
The Energy segment showed remarkable growth, aligning with the company’s strategic focus. The Telecommunications division also contributed positively within the ‘Others’ segment. However, the traditional CEC and Property segments faced headwinds, leading to overall revenue contraction.
Financial Health Snapshot
As at 31 March 2025, Citaglobal’s net assets per share stood at RM0.94, a slight increase from RM0.93 at the end of December 2024. The Group’s total assets were RM668.94 million, with total equity at RM399.01 million.
Cash flow from operating activities saw an improved outflow of RM10.26 million compared to RM12.12 million in Q1 2024. Investing activities also saw a significantly reduced outflow of RM0.10 million compared to RM18.72 million previously, reflecting less capital expenditure and investment during the quarter. However, net financing cash flows turned into an outflow of RM2.47 million from an inflow of RM4.28 million in Q1 2024, partly due to higher repayment of bank borrowings. Total borrowings increased to RM97.04 million from RM70.83 million in the same period last year.
Strategic Direction, Risks, and Future Prospects
Citaglobal’s Q1 2025 report not only provides a look back but also offers insights into its forward-looking strategies and the landscape it operates within.
Strategic Outlook and Growth Drivers
Citaglobal is currently in a significant transition phase, strategically shifting its focus towards the high-growth renewable energy and telecommunication sectors. This move is expected to be a major contributor to the Group’s future earnings.
The company has a robust pipeline of projects, with an outstanding order book of RM1.1 billion. Its property segment also holds an estimated remaining gross development value (GDV) of RM463 million, providing a steady stream of future revenue.
In a promising start to the year, Citaglobal secured two projects totaling RM36.3 million in January 2025, followed by another two projects worth RM36.1 million in February 2025. These new contracts are expected to positively impact the Group’s earnings and net assets per share for the financial years ending 31 December 2025 and 2026. The company remains actively engaged in tendering for new projects and exploring collaborations through various Memorandums of Understanding (MOUs) to further strengthen its financial performance.
A notable strategic move was the deemed disposal of Citaglobal Energy Sdn Bhd (CGE), where Citaglobal’s equity interest was reduced from 100% to 20%, reclassifying CGE as an associate. This strategic divestment is aimed at fostering a beneficial partnership and leveraging synergies for CGE’s long-term growth. The transaction resulted in a one-off gain of approximately RM1.437 million for Citaglobal.
The Group also announced a proposed acquisition of a 99-year leasehold land parcel in Jalan Tun Razak, Kuala Lumpur, for RM73 million. This strategic land acquisition, with its prime location and excellent connectivity, is anticipated to create long-term value and growth opportunities for the Group, particularly for its property development arm.
Key Risks and Challenges
While the prospects appear positive, Citaglobal faces certain challenges:
- Taxation: The effective tax rates for the quarter were higher than the statutory tax rate, primarily due to losses incurred by the Company and certain direct and indirect subsidiaries. This can impact overall profitability.
- Integration and Execution Risk: The strategic shift towards renewable energy and telecommunications, while promising, will require effective integration and execution to realize the anticipated contributions.
- Market and Economic Conditions: Like any business, Citaglobal remains susceptible to broader market and economic fluctuations, which can impact demand for its services and projects, especially in the construction and property sectors.
- Increased Borrowings: The rise in total borrowings warrants attention, as it could impact the company’s financial flexibility and interest expenses in the future.
Summary and
Citaglobal Berhad’s Q1 2025 report paints a picture of a company in transition, strategically navigating a dynamic market. Despite a slight dip in top-line revenue and pre-tax profit, the significant surge in net profit, fueled by strategic asset reclassification and strong associate contributions, highlights the company’s ability to unlock value.
The shift towards renewable energy and telecommunications, coupled with a robust order book and recent project awards, positions Citaglobal for potential long-term growth. The strategic land acquisition in Kuala Lumpur further underscores its commitment to enhancing its property development portfolio. The company’s recent dividend announcements also demonstrate its commitment to returning value to shareholders.
However, investors should also be mindful of the following key points:
- The impact of higher effective tax rates due to losses in certain subsidiaries.
- The successful execution and integration of the strategic shift towards new growth sectors.
- The management of increased borrowings and their potential impact on financial health.
Overall, Citaglobal appears to be laying down foundations for future expansion, leveraging its diverse business segments and making strategic moves to enhance its long-term value. Future reports will reveal how these strategies translate into sustained performance.
What are your thoughts on Citaglobal’s strategic shift towards renewable energy and telecommunications? Do you think the company can maintain this growth momentum in the next few years, especially with its new projects and acquisitions?
Share your views in the comment section below! And don’t forget to follow us for more in-depth analyses of Malaysian corporate earnings.
