Core Data Highlights: A Closer Look at Q1 2025 Performance

Let’s dissect the key financial figures from TIEN WAH PRESS HOLDINGS BERHAD’s latest quarterly report, comparing the current quarter (Q1 2025) with the corresponding period last year (Q1 2024) to understand the trends and changes.

Revenue Performance

The Group’s revenue for Q1 2025 showed a slight improvement, driven by increased demand from major tobacco customers in the Asia Pacific region. This indicates a stable core business, even in a challenging environment.

This represents a marginal increase of 0.5%, highlighting the consistent demand for the company’s products.

Profitability Shift

The most significant change in this quarter’s report is the shift from a profit to a loss before tax. This was largely due to an unrealised foreign exchange translation loss. It’s important to note that if this non-cash item were excluded, the company would have recorded a profit before tax of RM0.9 million, indicating that operational performance might be better than the headline figure suggests.

The 128.4% decrease in profit before tax and the substantial decrease in profit for the period and earnings per share underscore the impact of the foreign exchange loss and increased taxation.

Taxation Impact

The Group’s effective tax rate for Q1 2025 was higher than the Malaysian statutory tax rate of 24%. This is attributed to certain expenses that are not tax-deductible and losses in some subsidiaries that cannot be offset against taxable profit in other parts of the Group. This situation can significantly reduce net profitability even if operational results are otherwise stable.

This represents a 142.4% increase in tax expense, further contributing to the net loss.

Balance Sheet and Cash Flow Snapshot

While the profit and loss statement showed a challenging quarter, the balance sheet remains relatively stable. Net assets per share saw a minor decrease from RM1.91 at the end of 2024 to RM1.89 as of 31 March 2025. Total assets and equity also saw slight reductions, reflecting the quarter’s net loss and foreign currency translation differences.

From a cash flow perspective, net cash generated from operating activities decreased to RM2,419k in Q1 2025 from RM4,976k in Q1 2024. However, cash used in investing activities also decreased, indicating potentially lower capital expenditures. Net cash from financing activities also saw a reduction. The overall cash and bank balances remained relatively stable, suggesting prudent financial management despite the operational challenges.

Risks and Prospects: Charting the Path Ahead

TIEN WAH PRESS HOLDINGS BERHAD’s latest report not only details past performance but also sheds light on the company’s strategic focus and the challenges it anticipates. For investors, understanding these aspects is crucial for a forward-looking perspective.

Strategic Focus and Growth Prospects

The Group remains committed to enhancing its operational efficiency and waste management, which are critical for maintaining competitiveness in the printing industry. In parallel, the company is actively exploring new growth opportunities. This dual focus on cost control and expansion indicates a proactive approach to navigating the market.

The continued strong demand from major tobacco customers in the Asia Pacific region is a positive sign, underpinning the company’s core business stability. This regional strength could be a foundation for future growth initiatives.

Key Challenges and Risks

Despite the positive strategic outlook, several factors present potential headwinds:

• Foreign Exchange Volatility: As seen in Q1 2025, unrealised foreign exchange translation losses can significantly impact reported profitability. The weakening of the US Dollar against the Ringgit Malaysia specifically affected this quarter’s results. Companies with significant international operations or exposure to foreign currency-denominated transactions are always susceptible to these fluctuations.
• Effective Tax Rate: The higher effective tax rate due to non-deductible expenses and non-offsettable losses in subsidiaries indicates a complex tax structure that can erode net profits. This is a structural challenge that the company will need to manage effectively.
• Operational Cost Management: While administrative expenses saw a slight decrease, selling and distribution expenses, and other expenses, increased significantly. This suggests areas where cost pressures might be rising, requiring continuous vigilance on operational expenditure.
• Joint Venture Liquidation: The ongoing liquidation process of the Toyo (Viet) – DOFICO Print Packaging Co. Ltd. (TVDP) joint venture, pending an amended investment certificate and finalisation, could be a lingering administrative and financial process that demands management attention.
• Customer Concentration: While strong demand from “major tobacco customers” is currently a positive, a high reliance on a concentrated customer base, especially within a specific industry, can pose a risk if that industry faces structural changes or regulatory headwinds in the future. Diversification efforts, if any, would be crucial.

The company’s ability to mitigate these risks while capitalizing on new opportunities will be key to its future financial health.