Core Data Highlights: A Tale of Two Periods

Let’s break down the key financial figures, comparing the latest quarter with the same period last year, and then examining the full-year performance.

Quarterly Performance (Q4 FY2025 vs Q4 FY2024)

The final quarter of FY2025 was undeniably strong, showcasing significant growth across key metrics:

This translates to:

• Revenue: Up 18.24%
• Pre-tax Profit: Soared by 871.11%
• Net Profit: Increased by 307.71%
• Basic EPS: Jumped by 295.81%

The remarkable surge in pre-tax profit for the quarter was primarily driven by a significant positive change in the fair value of investment properties, as highlighted in the report. This non-operating gain provided a substantial boost to the bottom line.

Full-Year Performance (FY2025 vs FY2024)

While the final quarter was impressive, the full-year results present a different picture, with a decline in profitability despite healthy revenue growth:

Despite a robust 13.84% increase in full-year revenue, Tiong Nam’s pre-tax and net profits saw a significant decline. This was largely due to a substantial swing in “Net of other overhead (expenses) / income,” which transitioned from a gain of RM 33.2 million in FY2024 to an expense of RM 39.1 million in FY2025. Additionally, while fair value gains on investment properties contributed positively, their impact was smaller compared to the previous year. It’s noteworthy that the effective tax rate for FY2025 was lower due to tax incentives for integrated logistics, which helped to mitigate the decline in net profit.

Segmental Performance: Logistics Leads the Way

Tiong Nam’s core business, Logistics and Warehousing Services, continues to be the primary revenue driver, demonstrating solid growth:

• Logistics & Warehousing Services: Revenue increased by 21.5% to RM 218.3 million for the quarter, and by 14.5% to RM 826.1 million for the full year. This segment’s profitability remains strong, reflecting increased business volume and customer acquisition.
• Property Development: This segment saw a remarkable 585.7% surge in quarterly revenue to RM 9.6 million, though it recorded a pre-tax loss for the quarter. For the full year, revenue grew by 4.2% to RM 34.2 million, but it also registered a pre-tax loss, indicating that while sales improved, profitability remains a challenge.

Financial Health: Assets, Equity, and Cash Flow

The Group’s financial position strengthened, with total assets growing to RM 3.34 billion as of 31 March 2025, up from RM 2.99 billion last year. Total equity attributable to shareholders also increased to RM 1.06 billion (from RM 948.6 million), pushing Net Assets per share to RM 2.02 (from RM 1.85).

Cash flow from operations remained robust, generating RM 188.0 million in net cash for the full year (up from RM 167.2 million). This positive operational cash flow supports the Group’s significant investments in property, plant, and equipment (RM 77.3 million) and investment properties (RM 166.0 million) during the year, reflecting its expansion strategy. However, total borrowings also increased to RM 1.76 billion, signaling higher leverage.

Risks and Prospects: Navigating the Future

Tiong Nam is positioning itself for future growth, but like any business, it faces certain challenges.

Bright Prospects on the Horizon

The Group anticipates a positive performance in its integrated logistics and warehousing services for the financial year ending 31 March 2026 (FY2026). This optimism is underpinned by Malaysia’s resilient economic growth, expected increases in business volume, customer acquisition, and stringent cost management. Tiong Nam’s ongoing focus on enhancing operational efficiency, cost optimization, and service innovation is set to reinforce its market leadership and expand its client base. Crucially, new warehouses currently under construction, with secured tenants, are expected to contribute positively in FY2026.

A significant long-term growth avenue is Tiong Nam’s anticipated participation in the proposed development of a 300-acre high-tech logistics industrial park in Sedenak Technology Valley, Johor, via a joint venture with JLand Group Sdn Bhd. Johor’s strategic importance as a regional logistics hub, further bolstered by the Johor-Singapore Special Economic Zone (JS-SEZ), is poised to attract substantial investment and drive increased demand for logistics and industrial parks. The property development segment, with its ongoing projects also in Johor, is expected to see improvement, helping to offset potential challenges in the smaller dormitory segment.

Potential Risks and Considerations

While the outlook is generally positive, investors should be mindful of several factors:

• Increased Gearing: The Group’s total borrowings have increased, leading to higher finance costs. While investments are being made, sustained high debt levels could be a concern, especially in a rising interest rate environment.
• Profitability Volatility: The significant swing in “Net of other overhead (expenses) / income” and the impact of fair value changes on investment properties highlight the potential for volatility in reported profits, especially year-on-year. Investors should distinguish between operational and non-operational gains/losses.
• Property Development Profitability: Despite increased revenue, the property development segment recorded a pre-tax loss for both the quarter and full year. Ensuring consistent profitability from this segment will be crucial for overall financial health.
• Seasonality: The Group acknowledges that its operations are affected by festive seasons in June, December, and January due to fewer working days, which could impact quarterly performance.
• Litigation Overhang: While arbitration proceedings related to a material litigation case (Terminal Perintis Sdn Bhd vs TNH Maju Sdn Bhd) are currently stopped due to the contractor’s liquidation, it remains an unresolved legal matter that bears monitoring.