Greetings, fellow investors and market enthusiasts! Today, we’re diving deep into the latest financial pulse of WONG ENGINEERING CORPORATION BERHAD (WECB) as they release their unaudited condensed consolidated results for the second quarter ended 30 April 2025 (Q2 FY2025). This report offers a crucial snapshot of the company’s operational performance and financial health amidst a dynamic market landscape.
While the company has demonstrated commendable revenue growth, it’s also navigating a period of widening losses. The key takeaway? WECB is showing resilience in sales, particularly from its Precision Engineering segment, but faces significant headwinds from rising costs and foreign exchange fluctuations. Let’s break down the numbers and understand what this means for the company’s journey ahead.
Core Financial Highlights: A Mixed Bag
WECB’s Q2 FY2025 results present a nuanced picture. On one hand, revenue has seen a healthy increase, indicating strong demand for its products and services. On the other, the company continues to grapple with profitability challenges, with losses widening both quarter-on-quarter and year-on-year.
Quarter-on-Quarter Performance (Q2 FY2025 vs Q2 FY2024)
Comparing the current quarter with the same period last year reveals the following:
Current Quarter (Q2 FY2025)
Revenue: RM9.60 million
Loss Before Tax (LBT): RM(3.82) million
Loss for the Period: RM(3.82) million
Basic Loss Per Share: (1.53) sen
Corresponding Quarter (Q2 FY2024)
Revenue: RM8.51 million
Loss Before Tax (LBT): RM(3.19) million
Loss for the Period: RM(3.18) million
Basic Loss Per Share: (1.27) sen
Revenue for Q2 FY2025 increased by RM1.09 million, or approximately 12.8%, driven primarily by improved sales in the Precision Engineering segment. However, the Loss Before Tax (LBT) widened by RM0.63 million, a 19.6% increase, largely due to higher input costs, an unfavorable product mix, and unrealised foreign currency exchange losses.
Year-to-Date Performance (6 Months Ended 30 April 2025 vs 2024)
Looking at the cumulative six-month period, the trends are consistent:
Current Year-to-Date (YTD FY2025)
Revenue: RM19.49 million
Loss Before Tax (LBT): RM(7.38) million
Loss for the Period: RM(7.38) million
Basic Loss Per Share: (2.95) sen
Corresponding Year-to-Date (YTD FY2024)
Revenue: RM17.21 million
Loss Before Tax (LBT): RM(6.45) million
Loss for the Period: RM(6.47) million
Basic Loss Per Share: (2.59) sen
Cumulative revenue for the first six months of FY2025 grew by RM2.28 million, or 13.3%, compared to the same period last year. Despite this revenue growth, the cumulative LBT also widened by RM0.94 million, or 14.6%, reflecting the persistent cost pressures and foreign exchange impacts.
Current Quarter vs. Immediate Preceding Quarter (Q2 FY2025 vs Q1 FY2025)
A closer look at the sequential performance reveals a slight dip:
Current Quarter (Q2 FY2025)
Revenue: RM9.60 million
Loss Before Tax (LBT): RM(3.82) million
Immediate Preceding Quarter (Q1 FY2025)
Revenue: RM9.89 million
Loss Before Tax (LBT): RM(3.57) million
Revenue in Q2 FY2025 saw a marginal contraction of RM0.28 million (2.9%) compared to Q1 FY2025. This, combined with foreign currency fluctuations and unrealised fair value losses from other investments, led to a further widening of the Loss Before Tax by RM0.25 million (7.1%).
Segmental Performance Analysis
WECB operates through distinct business segments: Precision Engineering, Construction & Property Development (PD), and Investment. Here’s how each performed:
- Precision Engineering: This segment, encompassing manufacturing and sales of high-precision metal parts, remains the core revenue driver. Its revenue grew by RM1.09 million compared to Q2 FY2024, thanks to higher order shipments from the semiconductor and electrical and electronics sectors. However, the segment’s loss before tax widened by RM0.85 million, suffering from increased input costs, an unfavorable product mix, and foreign currency fluctuations.
- Construction & Property Development (PD): This segment recorded no revenue for the quarter. Its loss before tax of RM0.47 million primarily stemmed from its share of loss from an associate company. Encouragingly, this loss narrowed by 21.0% compared to Q2 FY2024.
- Investment: This segment showed a positive turn, recording a profit before tax of RM0.03 million, compared to a loss in the same quarter last year. This improvement was driven by rental income from investment properties. However, compared to the immediate preceding quarter, its profit dropped due to unrealised fair value losses from other investments.
Financial Health at a Glance
As of 30 April 2025, WECB’s financial position shows:
| Item | As at 30 April 2025 (RM’000) | As at 31 October 2024 (RM’000) |
|---|---|---|
| Total Assets | 104,388 | 111,608 |
| Total Equity | 57,187 | 64,571 |
| Total Liabilities | 47,201 | 47,037 |
| Net Asset Per Share (RM) | 0.23 | 0.26 |
| Cash & Cash Equivalents | 12,424 | 18,208 |
The company’s total assets and equity have decreased since the last financial year-end, primarily due to the accumulated losses. Cash and cash equivalents also saw a significant decrease, from RM18.21 million to RM12.42 million. While operating activities generated cash, significant outflows were observed in investing and financing activities, including capital investments and loan repayments.
Risks and Prospects: Navigating the Future
WECB acknowledges the challenging global economic climate. The company remains highly aware of the risks stemming from heightened geopolitical tensions, tariff volatility, and export controls, which collectively create a complex business environment. These external factors directly impact the supply chain and demand for their precision engineering products.
Despite these challenges, WECB is actively implementing strategies to enhance its operational efficiency and cost competitiveness. This includes efforts to mitigate the pressure from higher raw material costs and labour expenses. A key strategic move on the horizon is the upcoming arrival of new advanced CNC multitasking machines in the next quarter. This investment is crucial as it aims to significantly improve the company’s capacity and capability in multi-axis machining and turning.
The company is cautiously optimistic about its future, particularly in capturing new market opportunities. Beyond the semiconductor sector, WECB is setting its sights on the healthcare and life sciences industries, which could provide diversification and new avenues for growth. The management looks forward to a potential turnaround and positive results in the coming quarters, driven by these strategic initiatives and market diversification efforts.
Summary and Outlook
Wong Engineering Corporation Berhad’s Q2 FY2025 report highlights a period of increasing revenue, especially within its Precision Engineering segment, indicating healthy demand for its core products. However, this growth is currently overshadowed by widening losses, primarily driven by escalating input costs, an unfavourable product mix, and adverse foreign exchange movements. The company is actively investing in new technology and exploring new market segments like healthcare and life sciences to enhance its capabilities and diversify its revenue streams. While the path to profitability appears challenging in the short term, management’s strategic focus on efficiency and market expansion offers a hopeful outlook for the future.
Key points to consider:
- Revenue Resilience: Despite market headwinds, WECB’s ability to grow revenue, particularly in precision engineering, demonstrates underlying demand for its products.
- Cost & FX Pressures: The primary drag on profitability remains high input costs and adverse foreign exchange fluctuations, which the company is actively working to mitigate.
- Strategic Investments: The acquisition of new CNC machines is a significant capital investment aimed at boosting capacity and opening doors to new, higher-value market opportunities.
- Market Diversification: Expanding into healthcare and life sciences could reduce reliance on the cyclical semiconductor industry and provide more stable growth avenues.
From a professional standpoint, WECB’s journey reflects the broader challenges faced by manufacturing companies in the current global economic climate. While the widening losses are certainly a concern, the proactive steps taken by management – focusing on operational efficiency, technological upgrades, and market diversification – are crucial for long-term sustainability. The success of these strategies, particularly the integration of new machinery and penetration into new sectors, will be key to reversing the current loss trend.
What are your thoughts on WECB’s latest performance? Do you believe their strategic investments in new machinery and diversification into healthcare and life sciences will be enough to turn the tide and deliver positive results in the coming quarters? Share your insights in the comments below!
For more detailed analysis on Malaysian companies, consider exploring our other recent blog posts on related industries.
