Mudajaya Group Berhad: A Closer Look at Q1 2025 Performance – A Turnaround Fueled by Debt Reversal
Mudajaya Group Berhad (Mudajaya), a diversified Malaysian conglomerate with interests spanning construction, manufacturing and trading, property, and power, recently released its unaudited interim financial report for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s financial health and strategic direction amidst evolving market conditions.
While the report reveals a notable turnaround in profitability, moving from a loss to a profit, a deeper dive shows a contraction in revenue. The positive shift in the bottom line was significantly influenced by a substantial one-off gain. Let’s break down the key figures and strategic moves that shaped Mudajaya’s performance this quarter and what lies ahead.
Core Data Highlights: A Mixed Picture
Mudajaya’s first quarter performance presented a mixed bag, with a decline in revenue but a significant improvement in profitability compared to the corresponding period of the previous year.
The Group’s revenue for the first quarter ended 31 March 2025 stood at RM56.34 million, a notable decrease from RM80.50 million recorded in the same quarter last year. This represents a 30% contraction, primarily attributed to lower contributions from the Construction and Manufacturing & Trading segments.
Despite the revenue decline, Mudajaya successfully turned its pre-tax loss into a profit. The Group recorded a profit before tax of RM2.08 million for the quarter, a significant turnaround from the pre-tax loss of RM5.35 million in the corresponding quarter of the previous year. This impressive shift was largely driven by a substantial reversal of doubtful debts on trade and other receivables within the construction business.
Similarly, the profit attributable to owners of the Company also saw a remarkable improvement, moving from a loss of RM10.07 million in the previous year’s corresponding quarter to a profit of RM0.67 million in the current quarter. This translated into a positive basic and diluted earnings per share of 0.03 sen, compared to a loss per share of (0.54) sen in the prior year.
Q1 2025 Performance
| Revenue | RM56,338k |
| Profit Before Tax | RM2,076k |
| Profit Attributable to Owners | RM671k |
| Basic & Diluted EPS | 0.03 sen |
Q1 2024 Performance
| Revenue | RM80,495k |
| Loss Before Tax | (RM5,345k) |
| Loss Attributable to Owners | (RM10,066k) |
| Basic & Diluted EPS | (0.54) sen |
Segmental Performance: A Deeper Dive
Understanding the performance of each business unit provides clarity on the overall results:
Construction Segment
This segment experienced lower revenue compared to the corresponding quarter of the previous year, primarily due to the nearing completion of the Group’s construction projects. However, it recorded a significantly better result in the current quarter, largely due to the reversal of doubtful debts on trade and other receivables, which provided a substantial boost to profitability.
Manufacturing and Trading Segment
Comprising the cement business and trading of building materials in China, as well as construction materials and related product manufacturing in Malaysia, this segment saw lower revenue and a higher loss before tax. This was mainly driven by reduced cement sales volumes and a decline in selling prices in China, reflecting weaker local demand. Despite these challenges, the cement manufacturing plant in China is undergoing an expansion program to increase production capacity and improve cost efficiency, expected to be completed by the end of 2025.
Property Segment
The property segment reported higher revenue compared to the corresponding quarter of the previous year. Efforts are underway to clear the remaining property portfolio, alongside the new launch of a residential block with a gross development value of RM66 million in Batu Kawah New Township, Kuching, Sarawak. Construction for this project is in progress and is expected to be completed by the fourth quarter of 2026.
Power Segment
This segment reported a lower profit before tax compared to the corresponding quarter of the previous year, primarily due to lower power output generated during the period.
Other Segments
Mainly consisting of investment holding entities, this segment reported a lower loss before tax in the current quarter compared to the corresponding quarter of the previous year. This improvement was due to lower unrealised exchange rate losses related to foreign currency loans.
Financial Health Check and Cash Flow
As at 31 March 2025, Mudajaya’s total assets stood at RM1.99 billion, a slight decrease from RM2.02 billion at the end of December 2024. Total equity also saw a minor reduction to RM819.36 million from RM823.54 million. The net assets per share attributable to ordinary equity holders remained stable at RM0.21.
From a liquidity perspective, the Group’s cash flow from operating activities saw a significant turnaround, moving from a net cash outflow of RM133.42 million in the previous year’s corresponding quarter to a positive net cash inflow of RM21.65 million in the current quarter. This is a positive indicator of improved operational efficiency in generating cash.
Total borrowings decreased slightly from RM665.8 million as at 31 December 2024 to RM662.0 million as at 31 March 2025, mainly due to loan repayments and favourable foreign exchange differences. The weighted average interest rate for the Group’s borrowings was 6.18% per annum for the period.
Prospects and Strategic Outlook
Mudajaya is actively pursuing various strategies to enhance its long-term growth and mitigate risks across its diverse business segments:
China Operations (Real Jade Group)
The China-based Real Jade Group remains a significant contributor, accounting for 52% of the Group’s total revenue in the current quarter. Recognized as a national high-tech enterprise, its cement production line is undergoing an expansion from 2,500 tonnes per day to 4,000 tonnes per day, expected to be completed by the end of 2025. This expansion aims for higher cost efficiency and reduced production costs while complying with stricter environmental controls. The trading division in China is also expanding into key development projects in Tier 1 cities.
Malaysian Construction Sector
The Malaysian budget for 2025 signals positive prospects for the construction sector with increased development allocations, including projects like the Sarawak-Sabah Link Road (Phase 2) and the Penang Light Rail Transit (LRT) expansion. With RM12.6 billion allocated for Sabah and Sarawak, Mudajaya’s tender team has already participated in tenders worth RM3.7 billion and is hopeful of securing more infrastructure and private investment projects.
Power Sector Expansion
Mudajaya’s power division is poised to participate in renewable energy generation projects under the National Energy Transition Roadmap (NETR) Phase 1. The Group is also ready for the next bidding exercise for the Large Scale Solar 6 (LSS6) auction program and the upcoming bidding round for Battery Energy Storage Systems (BESS) installation in the third quarter of 2025. Opportunities in the renewable energy sector in Indonesia are also being actively pursued.
Property Development
The property division continues to capitalize on market opportunities with the new launch of an apartment block in Kuching, Sarawak, with a gross development value of RM66 million, expected to be completed by the fourth quarter of 2026.
Summary and
Mudajaya Group Berhad’s first quarter of 2025 highlights a critical period of transition. While the turnaround to profitability is a welcome sign, it’s essential to note that this was largely propelled by a significant one-off reversal of doubtful debts. The underlying operational revenue contraction, particularly in the core construction and manufacturing segments, suggests that the Group continues to navigate challenging market conditions.
The strategic initiatives outlined, such as the cement plant expansion in China, active participation in Malaysian infrastructure projects, and expansion into renewable energy, demonstrate the Group’s proactive approach to securing future growth. However, the success of these initiatives will be crucial in determining sustainable operational profitability moving forward.
Key risk points to monitor include:
- The sustainability of profitability beyond one-off gains, given the revenue decline.
- The ability to secure new construction projects to replenish the pipeline as existing ones near completion.
- Market demand and pricing pressures in the China cement business.
- The impact of foreign exchange fluctuations on its overseas operations and foreign currency-denominated loans.
- The Group’s capacity to manage its significant interest expenses effectively.
Mudajaya is clearly making strategic adjustments to navigate a dynamic economic landscape, balancing its traditional businesses with new growth avenues. However, the sustainability of its operational profitability will depend heavily on the successful execution of its expansion plans and securing new projects that can drive consistent revenue growth, rather than relying on non-recurring items.
What are your thoughts on Mudajaya’s strategy to balance its traditional construction business with its growing interests in power and property? Share your insights in the comments below!
For more in-depth analyses of Malaysian companies and market trends, stay tuned to our blog for future updates.
