Hey there, fellow investors and market enthusiasts! Today, we’re diving into the latest financial pulse of SIK CHEONG BERHAD, a key player in Malaysia’s RBD palm olein oil repackaging industry. The company has just released its unaudited interim financial report for the fourth quarter ended 31 March 2025, and it offers a fascinating look into their performance and future strategies.
While the full year has seen significant strides, the most recent quarter presents a mixed bag, highlighting both the company’s resilience and the competitive pressures it faces. A standout from the full-year perspective is the impressive adjusted Profit Before Tax (PBT) figure, showcasing the underlying strength of their operations. Let’s unwrap the numbers and see what’s truly brewing at SIK CHEONG.
Q4 FY2025 Performance: Navigating Headwinds
For this report, it’s crucial to note a unique aspect: as this is the company’s fourth interim financial report since its listing on the ACE Market in August 2024, there are no comparative figures available for the preceding year’s corresponding quarter or year-to-date. This means our quarter-on-quarter analysis will focus on the immediate preceding quarter (Q3 FY2025).
Key Takeaways from the Quarter:
- Revenue Stability: Q4 FY2025 revenue remained largely stable compared to Q3 FY2025.
- Profitability Dip: Gross profit and pre-tax profit saw a notable decrease quarter-on-quarter, primarily due to intense pricing competition.
- Full-Year Strength: Despite the quarterly dip, the full financial year 2025 shows a solid underlying performance, especially after adjusting for one-off listing expenses.
Quarter-on-Quarter Snapshot (Q4 FY2025 vs. Q3 FY2025)
Comparing the current quarter (Q4 ended 31 March 2025) with the immediate preceding quarter (Q3 ended 31 December 2024) reveals the impact of market dynamics:
Current Quarter (Q4 FY2025)
Revenue: RM23,764,728
Gross Profit: RM2,809,479
Profit Before Tax (PBT): RM1,205,481
Profit After Tax (PAT): RM775,330
Immediate Preceding Quarter (Q3 FY2025)
Revenue: RM23,822,206
Gross Profit: RM3,676,740
Profit Before Tax (PBT): RM1,907,611
Profit After Tax (PAT): RM1,421,345
As you can see, revenue for Q4 FY2025 saw a slight dip of just 0.24% compared to Q3 FY2025. However, the gross profit decreased by 23.59%, and PBT fell by 36.81%. The Profit After Tax (PAT) also experienced a significant reduction of 45.45% quarter-on-quarter. The report attributes this decline primarily to “intensified pricing competition within the industry,” which exerted downward pressure on sales prices for RBD palm olein products.
Full Financial Year 2025 Performance (Year-to-Date)
Looking at the bigger picture, SIK CHEONG BERHAD achieved a total revenue of RM90.06 million for the financial year ended 31 March 2025. The vast majority of this, about 94.10% (RM84.75 million), came from their core RBD palm olein oil products, with the remaining 5.90% (RM5.31 million) from trading third-party products.
The reported PBT for the full year stood at RM2.42 million. However, it’s important to consider the impact of one-off listing expenses incurred during the IPO process, amounting to approximately RM2.26 million. After adjusting for these non-recurring expenses, the company’s underlying PBT for the year would have been a healthier RM4.68 million. The Profit After Tax (PAT) for the full year was RM1.08 million, resulting in a basic and diluted earnings per share of 0.51 sen.
Financial Health: A Strong Balance Sheet
The company’s balance sheet as of 31 March 2025 shows a robust financial position. Total assets have grown significantly to RM46.79 million from RM31.82 million as of 31 March 2024. This increase is largely driven by growth in property, plant, and equipment, and a substantial rise in cash and cash equivalents, which surged to RM19.78 million from RM6.80 million a year ago. This impressive cash position is a direct result of the successful IPO proceeds.
Total equity also saw a healthy increase to RM44.06 million (from RM26.29 million), while total liabilities decreased to RM2.72 million (from RM5.53 million). Notably, the Group has no local or foreign borrowings as of 31 March 2025, which is a strong indicator of financial prudence and stability. The net assets per share stood at RM0.17.
Prospects and Strategies: Eyeing Future Growth
Despite the recent quarter’s challenges, the Board of Directors remains optimistic about SIK CHEONG’s future. They believe the RBD palm olein oil repackaging industry in Malaysia has favorable prospects, with an independent market research report projecting a compound annual growth rate (CAGR) of 20.9% between 2024 and 2026. This growth is expected to be fueled by:
- Continuous consumer demand driven by population growth, government subsidy programs, and the affordability/accessibility of palm olein oil.
- Increased demand from the Hotel, Restaurant, and Catering (HORECA) sector.
To capitalize on these opportunities, SIK CHEONG has outlined clear business strategies:
- Product Diversification: The company plans to expand its product range to include high oleic soybean oil by the second quarter of 2026, following the rebuilding of a new packaging facility. The soybean oil market in Malaysia is also projected to grow, offering an additional revenue stream and reducing reliance on a single product.
- Geographical Expansion: SIK CHEONG aims to grow its reach to other Malaysian states, specifically Perak, Negeri Sembilan, Melaka, and Pahang. This move will help the Group tap into new customer bases beyond its current primary markets of Kuala Lumpur and Selangor.
These strategies, coupled with the ongoing expansion of their packaging facility (with a capital commitment of RM1.98 million), position the company for long-term growth and market penetration.
Summary and
SIK CHEONG BERHAD’s fourth-quarter results for FY2025 reflect a period of adjustment amidst intensified market competition, particularly in pricing. While the quarter-on-quarter profitability saw a decline, it’s vital to view this within the context of the full financial year, which demonstrates a robust underlying performance, especially when accounting for the one-off listing expenses. The company’s strong balance sheet, characterized by a healthy cash position and zero borrowings, provides a solid foundation for future growth.
The management’s strategic focus on product diversification into high oleic soybean oil and geographical expansion across Malaysia are clear indicators of their commitment to long-term value creation. These initiatives align well with the projected growth of the edible oil repackaging industry in Malaysia, driven by fundamental demand factors.
Key points to consider from this report include:
- The impact of one-off listing expenses on reported full-year profitability, which, once adjusted, presents a more favorable view of operational earnings.
- The immediate challenge of pricing competition, which affected the latest quarter’s margins. This will be a key area to monitor.
- The strategic plans for product diversification and geographical expansion, which are crucial for sustainable growth and market share capture.
- The strong cash position and zero debt, offering significant financial flexibility for future investments and operations.
What are your thoughts on SIK CHEONG BERHAD’s latest performance and their forward-looking strategies? Do you believe their plans for product diversification and geographical expansion will effectively counter market pressures and drive future growth? Share your insights in the comments below!
