Nexgram Holdings Berhad: A Deep Dive into Their Q5 FY2025 Performance – Navigating Challenges, Charting a New Course
Greetings, fellow investors! Today, we’re taking a closer look at Nexgram Holdings Berhad’s latest unaudited interim financial report for the fifth quarter ended 30 April 2025. After a period of significant operational adjustments and addressing legacy issues, the report presents a fascinating picture of a company in transition. Is this a turning point for Nexgram, as they shed non-core assets and pivot towards new growth engines?
Let’s unpack the numbers and strategic shifts that are shaping Nexgram’s future.
Key Takeaways from the Quarter:
- Significant Profit Surge: Nexgram recorded a substantial profit before taxation of RM23.16 million for the current quarter, a remarkable increase from the immediate preceding quarter.
- Strategic Divestments: This profit was largely driven by an increase in operating income, primarily from the disposal of their Logistic and Healthcare divisions.
- Proactive Issue Resolution: The company is actively addressing past financial uncertainties and legal challenges, including settling winding-up petitions and debt repayment plans.
- New Growth Avenues: Nexgram is strategically diversifying into the hospitality sector and expanding its core ICT business into high-growth areas like data centers, blockchain, AI, and robotics.
Core Financial Performance: A Quarter of Strategic Adjustments
For the current quarter ended 30 April 2025, Nexgram’s financial performance shows a mixed bag on the revenue front but a significant improvement in profitability, largely due to strategic divestments.
Quarter-on-Quarter Snapshot (Q5 FY2025 vs. Q4 FY2025)
Current Quarter (30 April 2025)
Revenue: RM12,524,198
Gross Profit: RM4,072,901
Profit Before Taxation: RM23,156,915
Profit Attributable to Equity Holders: RM22,390,905
Basic Earnings Per Share: 2.52 sen
Immediate Preceding Quarter (31 January 2025)
Revenue: RM13,345,000
Gross Profit: RM3,368,000
Profit Before Taxation: RM4,461,000
Profit Attributable to Equity Holders: RM3,761,000
Basic Earnings Per Share: ~0.42 sen
While revenue saw a slight decrease of 6.15% to RM12.52 million, mainly attributed to reduced contributions from the ICT Malaysia division, the Group’s gross profit impressively increased by 20.93%. The most striking figure is the profit before taxation, which surged by an astounding 419.10% to RM23.16 million. This significant jump is primarily due to the increase in operating income from the strategic disposal of the Logistic and Healthcare divisions, highlighting the company’s efforts to streamline operations and focus on core strengths.
Year-to-Date Performance (Ended 30 April 2025)
For the financial period ended 30 April 2025, Nexgram reported a cumulative revenue of RM59.99 million, with the ICT Malaysia division contributing 100% of this figure. The cumulative profit before taxation stood at RM24.55 million, translating to basic earnings per share of 2.44 sen for the year-to-date.
Financial Health: Strengthening the Balance Sheet
Nexgram’s balance sheet as of 30 April 2025 shows positive movements in overall financial health:
30 April 2025 (Unaudited)
Total Assets: RM165,398,361
Total Equity: RM131,190,236
Total Liabilities: RM34,208,125
Net Assets Per Share: 13.17 sen
Cash & Bank Balances: RM2,194,485
Fixed Deposits: RM15,948,274
31 January 2024 (Audited)
Total Assets: RM164,236,683
Total Equity: RM120,423,024
Total Liabilities: RM43,813,659
Net Assets Per Share: 20.01 sen
Cash & Bank Balances: RM2,596,603
Fixed Deposits: RM8,308,733
The Group’s total assets saw a slight increase, while total liabilities significantly decreased from RM43.81 million to RM34.21 million, indicating an improved financial structure. Total equity also grew, strengthening the company’s financial base. However, it’s noteworthy that the net assets per share declined from 20.01 sen to 13.17 sen. This is primarily due to the increase in the number of ordinary shares in issue from private placements and the conversion of Irredeemable Convertible Preference Shares (ICPS), which increased the share capital from RM130.62 million to RM149.60 million.
Cash and cash equivalents also saw a healthy net increase of RM23.21 million for the period, demonstrating improved liquidity from operating activities.
Addressing Past Challenges and Charting Future Growth
Nexgram has been proactive in addressing the material uncertainties raised by their auditors regarding going concern. These included past net losses, a winding-up petition against the company, and issues with subsidiaries.
The management has outlined concrete steps:
- The acquisition of management rights for a hotel (Wings By Croske Resort Langkawi) is underway, expected to contribute positively to earnings.
- The winding-up petition against the company has seen the outstanding amount being settled in instalments.
- Nextnation Datacity Sdn Bhd, a wholly-owned subsidiary, had its loan fully settled, and the winding-up order is in the process of being terminated, meaning it will no longer be in liquidation.
- For Tri-G Technologies Sdn Bhd, a 51% owned subsidiary, a settlement plan has been agreed with the bank for its outstanding loan.
Strategic Outlook and Business Diversification
Looking ahead, Nexgram is bracing for a “tougher year” amidst economic recovery challenges, currency downturns, and rising commodity prices. Despite this, the management remains cautiously confident, focusing on resilient domestic demand.
Their strategic priorities include:
- Hospitality: Completing the acquisition of management rights for Wings By Croske Resort Langkawi, aiming to capitalize on the tourism recovery.
- ICT Expansion: The Sensorlink Group, a key part of Nexgram, will continue its focus on video surveillance and cybersecurity, especially in the financial sector. Excitingly, they plan to venture into high-growth areas like data centers, blockchain, artificial intelligence (AI), and robotics development, aligning with Malaysia’s ambition to become a regional data center hub.
- Market Share Growth: Investing in developing their own local brand access control system, time attendance, and visitor management systems to expand their product portfolio and capture new market share.
- Government Projects: Continued efforts to secure government retrofit projects related to security surveillance and IT infrastructure.
Summary and Outlook
Nexgram Holdings Berhad’s latest quarterly report paints a picture of a company undergoing a significant transformation. The substantial profit recorded this quarter, largely driven by strategic divestments, demonstrates a proactive approach to streamlining operations and improving financial health. The company is actively addressing its legacy challenges, particularly the legal and financial uncertainties that have previously clouded its outlook. The progress on resolving winding-up petitions and debt obligations is a positive sign of management’s commitment to stabilize the business.
Strategically, Nexgram is looking beyond its traditional segments, with an ambitious push into the hospitality sector and a deepened focus on advanced ICT areas like AI, blockchain, and data centers. These moves, if executed effectively, could lay the groundwork for future sustainable growth. While the economic environment remains challenging, the management’s cautious confidence and clear strategic direction offer a glimpse into their vision for the company’s future.
However, it is important for investors to consider the following key points:
- The significant profit for the quarter was largely due to one-off disposals, and sustained profitability will depend on the performance of the new and re-focused business segments.
- While progress has been made, the company is still navigating several ongoing legal cases and debt settlement plans, which require careful monitoring.
- The success of the new ventures, particularly in hospitality and advanced ICT, hinges on effective execution in a competitive and evolving market.
- The dilution of Net Assets Per Share due to share issuance is a factor to consider, as it impacts the value per existing share.
Final Thoughts: What’s Next for Nexgram?
Nexgram is clearly in a pivotal phase, strategically shedding non-core assets and aggressively pursuing new growth areas. The recent profit surge, while influenced by one-off events, signals a positive shift in its financial trajectory. The company’s commitment to resolving its historical financial and legal challenges is commendable and crucial for rebuilding investor confidence.
Do you believe Nexgram’s strategic pivot into hospitality and advanced ICT will provide the sustainable growth needed to maintain this positive momentum? Share your thoughts in the comments below!
