EPICON BERHAD’s Q1 2025: A Quarter of Transition and Strategic Growth Amidst Market Shifts

Greetings, fellow investors! Today, we’re diving into the latest financial report from EPICON BERHAD for the first quarter ended 31 March 2025. This quarter presents a fascinating picture of a company navigating a dynamic market environment, showcasing both the impact of maturing projects and the strategic foresight of recent acquisitions. While the headline figures show a year-on-year dip in revenue and profit, a closer look reveals a company actively positioning itself for future expansion, highlighted by a significant increase in its order book and the initial contributions from a key acquisition.

Join me as we break down the numbers and explore what this means for EPICON BERHAD’s journey ahead.

Core Data Highlights: Navigating the Numbers

EPICON BERHAD’s first quarter of 2025 saw a mixed performance when compared to the same period last year, but showed sequential improvement, largely influenced by strategic shifts and project cycles. Let’s unpack the key figures:

Year-on-Year Performance (Q1 2025 vs. Q1 2024)

The Group’s top and bottom lines experienced a contraction compared to the robust performance of the previous year’s corresponding quarter. This was primarily attributed to several active construction projects nearing completion in the prior period, leading to higher revenue recognition then. Additionally, the ‘Others’ segment saw a complete cessation of revenue due to the discontinuation of the stage bus business.

This translates to a 28.98% decrease in revenue and a more significant 58.48% drop in Profit Before Tax year-on-year. The lower revenue directly impacted the profitability for the quarter.

Quarter-on-Quarter Performance (Q1 2025 vs. Q4 2024)

In a more positive light, the Group demonstrated sequential improvement compared to the immediate preceding quarter (Q4 2024). This upturn signals the initial positive impact of the newly acquired Concrete Empire Sdn. Bhd. Group (“CESB Group”), whose acquisition was successfully completed on 5 February 2025.

Here, we see a slight 0.43% increase in revenue and a more substantial 21.95% rise in Profit Before Tax. This indicates that the strategic move to acquire CESB Group is already starting to bear fruit.

Segmental Performance and Financial Health

The Construction segment remains the cornerstone of EPICON BERHAD’s operations, though its revenue and profit contributions were lower year-on-year due to the reasons mentioned. The cessation of the ‘Others’ segment revenue further impacted the overall top line. However, the initial contribution from CESB Group is a crucial development, as it signals a new growth driver for the Group.

From a financial health perspective, the balance sheet shows an expansion in Total Assets, increasing from RM187.19 million as at 31 December 2024 to RM238.63 million as at 31 March 2025. This growth is largely attributable to the acquisition of CESB Group, which brought in new property, plant and equipment, right-of-use assets, inventories, and a significant increase in trade and contract assets. Correspondingly, total liabilities also increased, reflecting new borrowings and the put option liability related to the acquisition.

Cash flow from operating activities remained negative, though less so than the corresponding quarter last year. A significant outflow of cash for investing activities (RM9.53 million) was recorded, primarily due to the acquisition of subsidiaries. This was partly offset by robust net cash from financing activities (RM13.97 million), driven by an increase in borrowings, which is a common characteristic of companies undergoing expansion through acquisitions.

Risk and Prospect Analysis: Building for the Future

The Malaysian construction sector continues to be a vibrant space. The Department of Statistics Malaysia reported a strong 14.5% year-on-year growth for the sector in Q1 2025, marking its fifth consecutive quarter of double-digit expansion. This robust momentum, driven by specialized construction activities and residential buildings, provides a positive backdrop for EPICON BERHAD.

However, the journey is not without its challenges. The Group acknowledges potential headwinds from global economic uncertainties, particularly the indirect impact of changes in U.S. tariff policies on material costs. Fluctuations in material costs and a persistent shortage of skilled labour are also ongoing concerns that require diligent strategic management and adaptability.

Despite these challenges, EPICON BERHAD remains cautiously optimistic about the industry’s outlook for 2025. This optimism is underpinned by several factors: major infrastructure projects, a growing population, and increasing urbanization, all of which continue to fuel demand for construction services.

A significant highlight from this report is the Group’s outstanding order book, which now stands at a formidable RM900 million. This is an increase from RM840 million in the previous quarter, largely due to the inclusion of CESB Group’s order book. This expanded order book provides a strong revenue visibility for the coming quarters.

EPICON BERHAD is committed to securing additional construction contracts to further bolster its order book. The integration of CESB Group is a strategic move that enhances the Group’s capabilities and market presence, particularly in the infrastructure segment, allowing it to expand its range of construction services.

Final Thoughts and Your Perspective

This quarter for EPICON BERHAD appears to be a foundational one, laying the groundwork for future growth through strategic acquisitions and a strengthened order book. While the headline numbers might seem challenging at first glance, understanding the underlying drivers reveals a company actively investing in its long-term potential.

Do you think EPICON BERHAD can leverage its expanded capabilities and robust order book to navigate market challenges and achieve stronger growth in the coming quarters? Share your thoughts in the comments section below!