Salcon Berhad’s Q1 2025: A Surge in Revenue, Driven by Property Development, Amidst Industry Opportunities
Salcon Berhad, a familiar name in Malaysia’s infrastructure and property landscape, has just released its unaudited financial results for the first quarter ended 31 March 2025. The report paints a picture of robust growth, primarily fueled by a significant contribution from its Property Development division. While overall profits have seen a remarkable increase, the company continues to navigate market dynamics and strategic shifts across its diverse business units.
This quarter’s figures highlight an impressive surge in revenue and profit before tax, underscoring the strategic impact of recent ventures. Let’s dive deeper into the numbers and what they mean for Salcon’s trajectory.
Core Financial Highlights: A Quarter of Significant Growth
Salcon Berhad’s first quarter of 2025 demonstrates a strong financial rebound compared to the same period last year, largely due to the strategic recognition of landowner’s entitlement in its property segment.
Q1 2025 Performance
Revenue: RM181.10 million
Profit Before Tax (PBT): RM16.51 million
Profit for the Period: RM11.41 million
Profit Attributable to Owners: RM13.12 million
Basic Earnings Per Share: 1.27 sen
Q1 2024 Performance
Revenue: RM47.64 million
Profit Before Tax (PBT): RM3.84 million
Profit for the Period: RM3.68 million
Profit Attributable to Owners: RM4.44 million
Basic Earnings Per Share: 0.44 sen
The Group’s revenue soared by 280% to RM181.10 million compared to RM47.64 million in the corresponding quarter of the preceding year. This significant increase directly translated into a 330% jump in Profit Before Tax, reaching RM16.51 million from RM3.84 million previously. Profit attributable to owners of the Company also saw a robust 196% increase, climbing to RM13.12 million from RM4.44 million.
When looking at the immediate preceding quarter (Q4 2024), the current quarter’s revenue of RM181.10 million also marks a substantial 116% increase from RM83.82 million. Profit Before Tax improved by 13% from RM14.65 million in Q4 2024 to RM16.51 million in Q1 2025. This strong performance was primarily driven by the recognition of landowner’s entitlement within the Property Development Division.
Business Unit Performance: A Mixed Bag with Property Leading the Charge
Property Development Division
This division was the star performer, recording a revenue of RM128.67 million in the current quarter, primarily from the recognition of landowner’s entitlement. This led to a significant turnaround, with a Profit Before Tax of RM20.40 million, a stark contrast to the loss before tax of RM0.58 million in the preceding year corresponding quarter and a loss of RM0.47 million in the immediate preceding quarter. This gain was a key driver of the Group’s overall impressive results.
Constructions Division
The Constructions Division faced headwinds, with revenue decreasing by 6% to RM34.69 million compared to RM36.79 million in the corresponding quarter of the preceding year. It also saw a 41% decline in revenue compared to the immediate preceding quarter (RM58.36 million). Consequently, the division reported a loss before tax of RM0.51 million, a higher loss than RM0.35 million in the same quarter last year and a significant drop from a profit of RM6.07 million in the immediate preceding quarter. This decline was attributed to lower profit margins from construction projects.
Glove Manufacturing Division
This division showed signs of recovery. Revenue increased by 46% to RM11.91 million compared to RM8.18 million in the corresponding quarter of the preceding year. Despite a 34% decline in revenue compared to the immediate preceding quarter (RM18.04 million), the division managed to turn a profit before tax of RM35,000 in the current quarter, a notable improvement from a loss of RM0.96 million in the same quarter last year and a loss of RM0.44 million in the immediate preceding quarter. The improved profitability was mainly due to higher gross profit margins and reduced impairment losses on trade receivables recorded in the preceding quarter.
Healthcare Division
As a relatively new venture, the Healthcare Division recorded revenue of RM2.41 million and a loss before tax of RM2.50 million. Comparative figures for the preceding year corresponding quarter are unavailable as the division was not yet established. The loss increased compared to the immediate preceding quarter (RM0.74 million loss), mainly due to higher startup and operating costs incurred.
Trading and Services Division
This division saw revenue increase by 29% to RM3.37 million compared to RM2.62 million in the preceding year corresponding quarter. However, compared to the immediate preceding quarter (RM4.18 million), revenue decreased by 19%. The division recorded a higher profit before tax of RM0.92 million compared to RM0.68 million in the same quarter last year, mainly due to higher profit sharing from a joint venture company. The profit was lower than RM2.20 million in the immediate preceding quarter due to a gain from disposal of assets recognized then.
Financial Health: Balance Sheet and Cash Flow Snapshot
As of 31 March 2025, Salcon’s total assets stood at RM624.09 million, down from RM664.47 million at the end of 2024. Total equity attributable to owners of the Company increased to RM424.34 million from RM411.45 million, reflecting the quarter’s profitability. Net assets per share remained steady at RM0.41.
Total borrowings increased slightly to RM34.12 million from RM29.25 million in the corresponding period last year, primarily due to the acquisition of a subsidiary with existing loans. The Group’s cash and cash equivalents stood at RM142.86 million at the end of the quarter, a slight decrease from RM143.64 million at the beginning of the period.
Operationally, Salcon generated a healthy net cash inflow of RM31.27 million from operating activities, a significant improvement from a net cash outflow of RM0.81 million in the corresponding quarter of the preceding year. This indicates strong operational efficiency and cash generation capabilities despite the fluctuations in divisional performances.
Risks and Prospects: Navigating Challenges, Seizing Opportunities
Navigating Legal Challenges
Salcon is currently involved in material litigation through its subsidiary, JR Engineering and Medical Technologies (M) Sdn Bhd (“JREMT”), concerning a contract with Aspen Glove Sdn Bhd (“AGSB”). JREMT faces a counterclaim from AGSB for alleged breach of contract, claiming sums of RM74.65 million for loss of expenditure and RM99.33 million for loss of profit, totaling over RM173 million. While JREMT’s solicitors advise that AGSB’s claims are non-meritorious and JREMT is vigorously defending the suit, this contingent liability remains a significant point of attention for the Group.
Optimistic Outlook with Strategic Contract Wins
Despite the legal overhang, Salcon maintains an optimistic medium to long-term outlook, particularly in the water and wastewater infrastructure sector. This optimism is strongly underpinned by recent significant contract awards in March 2025, totaling approximately RM267 million:
- RM166.9 million from PAAB for a new water treatment plant and raw water pipeline in Melaka.
- RM88.8 million from Perbadanan Pembangunan Pulau Pinang for sewer upgrades at Batu Kawan Industrial Park.
- RM11 million for the redevelopment of a sewage treatment plant in Taman Bukit Cheras, Kuala Lumpur.
These awards not only demonstrate Salcon’s competitive edge and expertise in the water infrastructure sector but also align perfectly with national priorities focusing on flood mitigation and reducing non-revenue water. The Group is strategically positioned to leverage these ongoing national initiatives, which are expected to generate further opportunities and drive sustainable growth in the coming years.
Summary and
Salcon Berhad’s Q1 2025 results clearly showcase a strong performance driven by its Property Development division’s significant contribution. The impressive growth in revenue and profit before tax underscores the strategic value of its diverse business portfolio. While the Constructions division faced a challenging quarter, and the Healthcare division is still in its early growth phase, the recovery in Glove Manufacturing and stable performance in Trading & Services provide additional support.
The Group’s robust cash flow from operations is a positive sign of its underlying business health. Looking ahead, the recent substantial contract wins in water and wastewater infrastructure provide a clear growth pipeline and reinforce Salcon’s core capabilities in a critical sector for Malaysia.
However, potential investors should be aware of the ongoing material litigation, which represents a significant contingent liability. This legal case could introduce uncertainty, although the company is confident in its defense.
Key points to consider:
- Strong overall financial performance driven by Property Development.
- Significant new contract awards in the water infrastructure sector, aligning with national development priorities.
- Ongoing material litigation with Aspen Glove Sdn Bhd, presenting a substantial contingent liability.
- Mixed performance across business units, with some facing margin pressures or high startup costs.
From my perspective as a seasoned observer of the Malaysian market, Salcon’s Q1 2025 results reflect a company effectively leveraging strategic assets while navigating operational challenges. The substantial contract wins in water infrastructure are particularly encouraging, signaling a strong pipeline for future revenue and reaffirming the Group’s expertise in a vital sector. The property segment’s contribution demonstrates the benefits of diversification, although the ongoing legal matter warrants careful monitoring. This report suggests a company with strategic depth, poised to capitalize on infrastructure development opportunities while managing inherent business complexities.
What are your thoughts on Salcon’s performance this quarter? Do you think the company can maintain this growth momentum in its core infrastructure business while managing its diversified segments and legal challenges?
Share your views in the comments below!
