COSMOS Technology International Berhad: Navigating Strategic Shifts and Future Growth in Water & Energy
COSMOS TECHNOLOGY INTERNATIONAL BERHAD (COSMOS) has just released its Fourth Quarter and Full Year Financial Report for the period ended 30 April 2025. This report offers a comprehensive look into the company’s strategic evolution, highlighting strong performance in its continuing operations while managing the significant impact of a discontinued segment. For Malaysian retail investors, understanding these dynamics is key to assessing COSMOS’s trajectory.
The core takeaway? COSMOS’s distribution segment demonstrated impressive growth, and the company is strategically positioning itself for future opportunities in Malaysia’s burgeoning water sector and new energy-saving solutions, including the integration of AI. Despite an overall net loss for the year due to the discontinued manufacturing business, the underlying health of the continuing operations and the forward-looking initiatives are noteworthy.
Core Data Highlights: A Dual Narrative
Overall Performance: The Impact of Strategic Divestment
The latest quarter and full financial year for COSMOS present a mixed picture, largely due to the strategic disposal of its manufacturing subsidiary, MCI ETech Sdn Bhd (MCI), on 30 December 2024. This move led to the manufacturing segment being classified as a discontinued operation, significantly altering the consolidated figures.
Q4 FY2025 (Ended 30 April 2025)
Total Revenue: RM5,495k
Total Profit Before Tax (PBT): RM710k
Total Profit After Tax: RM434k
Total Basic Earnings Per Share: 0.17 sen
Q4 FY2024 (Ended 30 April 2024)
Total Revenue: RM7,766k
Total Profit Before Tax (PBT): RM442k
Total Profit After Tax: RM300k
Total Basic Earnings Per Share: 0.11 sen
While total revenue for the fourth quarter decreased by 29.2% to RM5.5 million compared to RM7.8 million in the same period last year (primarily due to the manufacturing segment’s cessation), the total Profit Before Taxation (PBT) saw a remarkable increase of 60.6% to RM0.71 million, up from RM0.44 million previously. This improvement in overall PBT is largely attributed to the elimination of losses from the discontinued manufacturing operation.
Deep Dive into Continuing Operations: The Distribution Segment Shines
Focusing on the core, continuing distribution business reveals a healthier picture. The distribution segment is the engine of COSMOS’s current and future growth:
Q4 FY2025 (Continuing Operations)
Revenue: RM5,495k
Profit Before Tax (PBT): RM710k
Profit After Tax (PAT): RM434k
Basic Earnings Per Share: 0.17 sen
Q4 FY2024 (Continuing Operations)
Revenue: RM4,577k
Profit Before Tax (PBT): RM706k
Profit After Tax (PAT): RM526k
Basic Earnings Per Share: 0.20 sen
For the fourth quarter, the distribution segment’s revenue grew by 20.1% to RM5.5 million from RM4.6 million in the corresponding quarter last year. This growth was spurred by initial impacts of government budget allocations for Non-Revenue Water (NRW) reduction, securing NRW-related orders, particularly from Sabah, and the completion of previously delayed projects. While PBT for the continuing operation saw a marginal 0.6% increase to RM0.71 million, the Profit After Tax (PAT) for the continuing operation actually decreased by 17.5% to RM0.43 million. This divergence is primarily due to a higher effective tax rate in the current quarter (38.9%) compared to the same period last year (25.5%), attributed to certain non-deductible expenses and under-provision of tax in prior periods.
For the full financial year ended 30 April 2025, the continuing distribution operation recorded a revenue of RM20.07 million, an 18.8% increase from RM16.89 million in the previous year. Its PBT for the year also grew by 8.3% to RM3.37 million, up from RM3.11 million.
Financial Health Check: Balance Sheet and Cash Flow
COSMOS’s balance sheet reflects the significant strategic changes. Total assets decreased to RM50.34 million as at 30 April 2025 from RM67.30 million a year ago, largely due to the deconsolidation of the manufacturing subsidiary. Similarly, total equity reduced to RM42.94 million from RM53.05 million.
| Financial Metric | As at 30 April 2025 (RM’000) | As at 30 April 2024 (RM’000) |
|---|---|---|
| Total Assets | 50,342 | 67,300 |
| Total Equity | 42,938 | 53,049 |
| Net Assets Per Share (sen) | 16.74 | 20.68 |
| Cash and Bank Balances (End of Year) | 25,214 | 13,203 |
| Total Borrowings | 1,500 | 5,169 |
A notable positive is the substantial increase in cash and bank balances, which jumped to RM25.21 million from RM13.20 million last year. This surge is significantly boosted by the RM10.47 million proceeds from the disposal of the subsidiary, reflecting a stronger liquidity position. Furthermore, the company has managed to reduce its total borrowings significantly to RM1.5 million from RM5.17 million, enhancing its financial flexibility.
Cash flow from operating activities for the year was RM2.32 million, while investing activities generated RM10.17 million (driven by the subsidiary disposal), and financing activities utilized RM0.48 million, leading to a net increase in cash and cash equivalents.
Strategic Outlook and Future Prospects
COSMOS is clearly focused on leveraging the opportunities presented by Malaysia’s evolving water sector and expanding into new, related areas:
- Water Sector Transformation 2040 (WST 2040): The government’s focus on transforming the water sector positions COSMOS well. The company aims to capitalize on increased capital expenditure, particularly in states like Selangor and Johor, by actively participating in state government tenders for NRW solutions (noise/data loggers, advanced pressure management systems, flowmeters, pressure reducing valves).
- New Project Ventures: COSMOS plans to explore project-based ventures in water treatment plant upgrades and new developments, as well as data centers. They are also tendering for SCADA/control systems and full instrumentation packages for projects like Rasau (stage 2).
- Expanding Product Offerings: The Group is broadening its portfolio to include comprehensive energy-saving solutions, especially for HVAC and general industry applications. Their new “Demand Control Drives” are designed to optimize energy usage and reduce electricity bills, offering significant financial benefits.
- Smart Water Meters: COSMOS intends to distribute ultrasonic smart water meters (Axioma) with high accuracy, remote reading, and leak detection capabilities. These meters are suitable for both residential and commercial use, driven by increasing water tariffs. The company is currently seeking SIRIM approval for these products.
- AI Integration with Cosmos AI Tech Sdn Bhd: The incorporation of Cosmos AI Tech Sdn Bhd, an 80% owned subsidiary, is a strategic move to address the lack of AI automation in the industry. This new entity will focus on integrating components, enabling open architecture, and providing flexibility for SCADA and control monitoring systems, enhancing operational efficiency for water treatment plants.
Summary and Outlook
COSMOS Technology International Berhad is undergoing a significant strategic transformation. The divestment of its manufacturing segment, while resulting in a consolidated net loss for the financial year due to one-off impacts, has allowed the company to refocus on its growing and profitable distribution business. The enhanced cash position and reduced borrowings provide a strong financial foundation for future investments and growth initiatives.
The company’s proactive engagement with the Water Sector Transformation 2040, coupled with its expansion into energy-saving solutions and cutting-edge AI integration for water management, demonstrates a clear vision for capitalizing on emerging market opportunities. While challenges remain, particularly in navigating a competitive tender environment and ensuring successful market penetration for new products, COSMOS appears to be charting a deliberate course towards long-term sustainability and value creation.
Key points from this report include:
- The distribution segment is the core growth driver, showing healthy revenue expansion.
- The disposal of the manufacturing segment significantly impacted the overall annual profitability but removed a loss-making operation, improving the overall PBT.
- COSMOS has significantly improved its cash position and reduced debt, providing financial stability.
- Strategic focus on the Malaysian water sector, energy efficiency, and AI integration positions the company for future growth.
From a professional standpoint, COSMOS’s move to divest its manufacturing arm and concentrate on its high-growth distribution segment, while simultaneously investing in future-centric areas like AI and smart water solutions, appears to be a calculated and forward-looking strategy. The immediate financial impact of the discontinued operation is significant, but the underlying health of the continuing business and the strategic direction
