Navigating the Headwinds: A Look into South Malaysia Industries’ Q3 2025 Performance
Hello fellow Malaysian retail investors! Today, we’re diving deep into the latest financial report from South Malaysia Industries Berhad (SMI) for its third quarter and financial period ended 31 March 2025. This report provides a crucial snapshot of the company’s performance amidst evolving market conditions and significant ongoing corporate developments.
While SMI continues to face revenue challenges, the latest figures show a notable reduction in overall losses for the period. However, the report also highlights a complex web of legal battles that could significantly influence its future trajectory. Let’s unpack the numbers and understand what’s truly shaping SMI’s journey.
Unpacking the Numbers: Q3 2025 Financial Performance
Quarterly Snapshot: Q3 2025 vs. Q3 2024
For the third quarter ended 31 March 2025, SMI reported a revenue of RM6.36 million, a decrease compared to RM7.32 million in the corresponding quarter last year. Despite the revenue dip, the company managed to significantly reduce its loss before tax.
Q3 2025
Revenue: RM6,363k
Loss Before Tax: RM(2,084)k
Net Loss: RM(2,097)k
Basic Loss Per Share: (1.00) sen
Q3 2024
Revenue: RM7,323k
Loss Before Tax: RM(2,709)k
Net Loss: RM(2,698)k
Basic Loss Per Share: (1.29) sen
The Group’s revenue for the quarter saw a 13.11% decline. However, the loss before tax improved significantly, reducing by 23.03%, and net loss decreased by 22.28%. This indicates an improvement in cost management or a shift in the profitability of certain segments, despite the lower top-line performance.
Year-to-Date Performance: 9 Months Ended 31 March 2025 vs. 2024
Looking at the cumulative nine-month period, SMI’s revenue also saw a reduction, but its overall losses narrowed compared to the previous financial period.
9 Months Ended 31 March 2025
Revenue: RM21,842k
Loss Before Tax: RM(6,209)k
Net Loss: RM(6,389)k
Basic Loss Per Share: (3.04) sen
9 Months Ended 31 March 2024
Revenue: RM25,766k
Loss Before Tax: RM(6,510)k
Net Loss: RM(6,647)k
Basic Loss Per Share: (3.17) sen
For the nine-month period, revenue decreased by 15.28%. Despite this, the loss before tax improved by 4.62%, and net loss reduced by 3.88%. This trend suggests that while revenue generation remains a challenge, the company is making strides in controlling its overall losses.
Segmental Performance Breakdown
SMI operates across three main segments: Manufacturing & Trading, Property Development, and Property & Investment Holding. Their performance in Q3 2025 reveals a mixed bag:
| Segment | Q3 2025 Revenue (RM’000) | Q3 2024 Revenue (RM’000) | Revenue Change (%) | Q3 2025 PBT (RM’000) | Q3 2024 PBT (RM’000) | PBT Change (%) |
|---|---|---|---|---|---|---|
| Manufacturing & Trading | 3,951 | 4,908 | -20% | (799) | (1,032) | +23% (Lower Loss) |
| Property Development | 375 | 529 | -29% | (682) | (1,259) | +46% (Lower Loss) |
| Property & Investment Holding | 2,037 | 1,886 | +8% | (603) | (418) | -44% (Higher Loss) |
- Manufacturing & Trading: Revenue declined by 20% due to intense competition from China-imported galvanised wire and weak local demand. However, the segment successfully reduced its loss by 23% primarily due to lower wire rod costs and administrative expenses.
- Property Development: This segment saw a significant 29% drop in revenue, attributed to low demand and delays in launching the Taman Klebang Phase 3 project. Despite this, losses were cut by a substantial 46% due to lower operating costs.
- Property & Investment Holding: A bright spot, this division recorded an 8% increase in revenue, driven by higher income from carpark operations and rental properties. However, its loss widened by 44% due to higher operating costs.
Financial Health: Balance Sheet and Cash Flow
As of 31 March 2025, SMI’s total assets stood at RM146.62 million, a decrease from RM155.69 million as at 30 June 2024. Total equity also saw a slight dip to RM124.46 million from RM130.38 million. Net assets per share declined marginally to RM0.59 from RM0.62.
From a cash flow perspective for the nine-month period, net cash used in operating activities improved significantly, from RM8.69 million in the previous year to RM3.46 million. However, net cash from investing activities decreased, and net cash from financing activities shifted to an outflow, resulting in an increased net decrease in cash and cash equivalents during the period.
Risks and Prospects: Navigating a Complex Landscape
SMI’s outlook is a blend of opportunities and significant challenges, both internal and external.
Prospects: Riding the Economic Wave
Malaysia’s GDP growth of 5.1% in 2024 provides a positive backdrop for certain segments. The Group anticipates an improvement in its carpark business, aligning with increased economic activities. In the property sector, while a glut is expected to persist in the near term, SMI plans to focus on selling unsold units in Kelana Jaya and continuing its existing projects in Perak. The manufacturing division aims to minimize its losses, while the investment holding division’s rental and carpark income are expected to benefit from the strengthening economy.
Significant Headwinds and Legal Complexities
However, SMI faces considerable external and internal risks:
- External Economic Pressures: The impending 24% US reciprocal tariff on Malaysian imports (effective July 8, 2025) poses a significant threat to Malaysia’s economy, which could indirectly impact SMI. Furthermore, ongoing geopolitical tensions, rising global commodity prices, persistent inflation, and tightening global financial market conditions are expected to hinder any significant improvement in the Group’s results.
- Extensive Material Litigation: The report details a multitude of ongoing legal cases, which represent a major concern. These disputes are complex and involve significant aspects of corporate control, shareholder rights, and a mandatory takeover offer. Key areas of litigation include:
- Disputes over access to the Record of Depositors and the convening of Extraordinary General Meetings (EGMs).
- Challenges to the validity of EGMs and the appointment of directors.
- Allegations of stock market manipulation and disputes regarding the mandatory general offer price (RM0.45 per share vs. claims of RM1.06 to RM1.50 per share).
- Judicial reviews against the Securities Commission Malaysia (SC) concerning its decisions related to takeover rules and director appointments.
These legal battles consume significant management time and resources, create uncertainty, and could have substantial financial and operational implications depending on their outcomes. The sheer volume and nature of these lawsuits suggest a highly contested corporate environment.
Summary and
South Malaysia Industries’ Q3 2025 report paints a picture of a company striving to improve its financial performance amidst a challenging operational landscape. While the reduction in overall losses is a positive sign, particularly in the manufacturing and property development segments due to better cost management, the decline in revenue across most divisions indicates persistent market difficulties. The Property & Investment Holding segment stands out with revenue growth, though at the expense of higher operating costs.
The company’s prospects are tied to the broader Malaysian economic recovery, especially for its property and investment holding segments. However, the looming US tariff and global economic uncertainties present significant external headwinds.
Crucially, the extensive list of ongoing legal disputes casts a long shadow over SMI. These litigations, ranging from shareholder control issues to challenges against regulatory decisions and a mandatory takeover offer, introduce a high degree of uncertainty and risk. The outcomes of these cases could dramatically alter the company’s ownership, management, and strategic direction.
Please note: This blog post is for informational purposes only and does not constitute financial advice or . Investors should conduct their own thorough due diligence and consult with a qualified financial advisor before making any investment decisions.
Key risk points highlighted by this report include:
- Declining revenue in core segments, particularly Manufacturing & Trading and Property Development, indicating persistent market challenges.
- Significant exposure to external economic headwinds, including potential US tariffs and global inflationary pressures.
- A complex and extensive array of ongoing material litigations that could impact corporate control, governance, and financial stability.
- Increased operating costs in the Property & Investment Holding segment, despite revenue growth.
- Cash flow from investing activities decreased and financing activities shifted to an outflow, leading to a higher net decrease in cash and cash equivalents for the nine-month period.
From a professional standpoint, SMI’s ability to reduce its losses is commendable, especially in the face of revenue contraction. This suggests some internal efficiencies or strategic adjustments are taking effect. However, the sheer scale and complexity of the legal challenges cannot be understated. These disputes could overshadow any operational improvements and demand significant attention from management and shareholders alike.
What are your thoughts on SMI’s performance and the multitude of legal cases it’s embroiled in? Do you believe the company can navigate these turbulent waters effectively and maintain its growth momentum in the coming years? Share your insights and perspectives in the comments section below!
