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Zhulian’s Q2 2025 Report: Revenue Climbs Amidst Profit Pressures, Rewards Shareholders with Dividend
Zhulian Corporation Berhad, a familiar name in the direct selling industry, has just released its financial results for the second quarter ended May 31, 2025. The report paints a picture of resilient growth in a challenging market, showcasing a commendable increase in revenue. However, the bottom line tells a slightly different story, facing headwinds from currency fluctuations and tax impacts.
One of the standout announcements for investors is the declaration of a second interim dividend of 1 sen per share. This move signals the management’s confidence and commitment to shareholder returns, even as it navigates a complex economic landscape. Let’s dive deeper into the numbers.
Core Data Highlights: A Mixed but Revealing Picture
At first glance, Zhulian’s performance presents a classic case of strong top-line growth met with bottom-line pressure. While sales have picked up impressively, profitability has seen a slight dip compared to the same period last year.
Revenue Soars, but Profits Feel the Squeeze
The Group’s revenue saw a significant jump, indicating healthy demand and effective marketing strategies. However, profit after tax declined, primarily due to a stronger Ringgit and a higher effective tax rate for the period.
Q2 2025 (Current Quarter)
- Revenue: RM 37.85 million
- Profit Before Tax: RM 7.73 million
- Net Profit: RM 5.99 million
- Earnings Per Share: 1.30 sen
Q2 2024 (Comparative Quarter)
- Revenue: RM 33.28 million
- Profit Before Tax: RM 7.56 million
- Net Profit: RM 6.57 million
- Earnings Per Share: 1.43 sen
The 14% surge in revenue is a testament to the company’s successful promotional campaigns that boosted customer engagement. On the other hand, the 9% drop in net profit is attributed to two main factors: lower results from operating activities due to the strengthening of the Ringgit against the US dollar, and a higher effective tax rate.
Geographical Performance: Thailand Leads the Charge
A closer look at the revenue sources reveals that the Thai market remains Zhulian’s powerhouse, contributing significantly to the overall growth. The Malaysian market also showed steady improvement.
| Region | Q2 2025 Revenue (RM’000) | Q2 2024 Revenue (RM’000) | Growth (%) |
|---|---|---|---|
| Thailand | 27,908 | 23,715 | +18% |
| Malaysia | 6,871 | 6,493 | +6% |
| Cambodia | 2,840 | 2,739 | +4% |
| Others | 235 | 329 | -29% |
The impressive 18% growth in Thailand underscores the strength of Zhulian’s brand and direct marketing network in the region. Furthermore, the share of profit from its equity-accounted associate in Thailand increased by a healthy 23% this quarter, bolstering the Group’s pre-tax profit.
Financial Health Check: Solid and Stable
Zhulian maintains a robust financial position. As of May 31, 2025, the Group’s total assets stood at RM457.8 million with total liabilities of only RM32.9 million. The company remains debt-free, a strong indicator of financial prudence.
The cash and cash equivalents decreased from RM160.1 million to RM134.2 million. This reduction is primarily due to dividend payments to shareholders totaling RM18.5 million and cash used for working capital, reflecting a proactive use of funds to reward investors and run operations smoothly. The net asset per share remains solid at 92.37 sen.
Risk and Prospect Analysis: Navigating the Headwinds
The management acknowledges that the path ahead is not without its challenges. The direct selling industry is expected to remain competitive, compounded by weaker consumer demand amid economic uncertainties. Rising inflation is another key concern, as it puts pressure on product costs and, consequently, profit margins.
To counter these risks, Zhulian is focusing its efforts on several key strategies:
- Strengthening Support for Entrepreneurs: Empowering its network of business leaders to drive sales and market penetration.
- Reviewing Pricing Structures: Adapting to inflationary pressures while maintaining competitive pricing.
- Managing Operational Efficiency: Controlling costs and optimizing processes to protect margins.
Summary and Concluding Thoughts
Zhulian’s Q2 2025 results present a narrative of resilience. The strong revenue growth, particularly from its key Thai market, is highly encouraging and demonstrates the company’s solid market presence. While the decline in net profit is a point of concern, it is backed by clear external factors like currency movements and tax provisions rather than a fundamental weakness in operations. The consistent dividend policy further reinforces the company’s stable financial footing and shareholder-friendly approach.
Investors should continue to monitor the following key areas:
- Consumer Spending Power: The overall economic climate and its impact on consumer demand will be a critical factor for the direct selling industry.
- Inflationary Pressures: The company’s ability to manage rising costs and maintain healthy profit margins will be crucial.
- Foreign Exchange Fluctuations: As a company with significant overseas operations, currency movements will continue to influence reported earnings.
- Execution of Strategy: The effectiveness of its strategies to support distributors and manage efficiency will determine its ability to navigate the challenging market.
What’s Your Take?
From a professional standpoint, Zhulian’s ability to grow its top line in the current environment is a significant achievement. The focus now shifts to translating that revenue growth into stronger bottom-line performance. The company’s debt-free status and commitment to dividends provide a stable foundation.
Do you think Zhulian can maintain this growth momentum and overcome the margin pressures in the upcoming quarters?
We invite you to share your thoughts and perspectives in the comments section below. For more in-depth analyses of companies on the Malaysian stock market, be sure to browse our other articles.
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