EPICON’s Q2 2025 Results: Revenue Climbs 11% on New Acquisition, but Profits Face Headwinds
EPICON Berhad, a key player in Malaysia’s construction sector, recently released its financial results for the second quarter ending June 30, 2025. The report reveals a compelling story of strategic growth through acquisition, with revenue showing a healthy increase. However, this growth is met with profitability challenges, reflecting a dynamic and demanding industry landscape. Let’s dive into the numbers to understand what this means for the company.
A standout figure from the report is the Group’s robust outstanding order book, which stands at an impressive RM836 million. This provides significant earnings visibility for the medium term and underscores the company’s strong project pipeline.
Core Financial Highlights: A Mixed Performance
In the second quarter of 2025, EPICON demonstrated strong top-line growth, largely driven by its recent strategic moves. However, a closer look at the bottom line reveals some pressure points.
Quarterly Performance (Q2 2025 vs Q2 2024)
The latest quarter saw a significant revenue boost, a direct result of the contribution from the newly acquired Concrete Empire Sdn. Bhd. Group (CESB). This indicates the acquisition is already bearing fruit. Despite this, pre-tax profit saw a decline, which the management attributes to higher staff costs from an expanded workforce needed to support its growth.
Q2 2025 (Current Quarter)
Revenue: RM 53.24 million
Profit Before Tax: RM 2.81 million
Net Profit Attributable to Owners: RM 1.47 million
Basic Earnings Per Share (EPS): 0.27 sen
Q2 2024 (Corresponding Quarter)
Revenue: RM 47.96 million
Profit Before Tax: RM 3.81 million
Net Profit Attributable to Owners: RM 2.53 million
Basic Earnings Per Share (EPS): 0.43 sen
A Glance at the First Half of 2025
Looking at the cumulative six-month period, both revenue and profit were lower compared to the first half of 2024. This was primarily due to the high base effect from several large projects nearing completion last year, alongside the cessation of the Group’s legacy stage bus operations. The increase in payroll costs also contributed to the reduced profitability for the period.
| Financial Metric (6 Months Ended) | 30 June 2025 (RM’000) | 30 June 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 93,160 | 104,175 | -10.57% |
| Profit Before Tax | 4,986 | 9,053 | -44.92% |
| Net Profit Attributable to Owners | 2,874 | 6,103 | -52.91% |
Risks and Prospects: Navigating a Growing but Challenging Construction Landscape
EPICON is operating within a favorable macroeconomic environment. Malaysia’s construction sector grew by a strong 11.0% in the second quarter of 2025, buoyed by infrastructure and non-residential building activities. The Group is well-positioned to capitalize on this trend, especially with its substantial order book of RM836 million.
The strategic integration of CESB is expected to significantly enhance EPICON’s capabilities, particularly in the infrastructure segment, and strengthen its project pipeline. The management remains committed to actively securing new contracts to ensure sustainable growth.
However, the industry is not without its challenges. The Group has identified two key risks:
- Rising Labour Costs: A nationwide increase in the minimum wage, effective August 1, 2025, is expected to exert upward pressure on operational costs.
- Sales and Service Tax (SST) Expansion: Recent changes to the SST framework could add compliance and cost burdens to the industry.
EPICON’s management has assessed these risks and believes the impact will be manageable. They expect a minimal hit from the SST expansion, as most of their current projects are residential (which are generally SST-exempt) and benefit from Business-to-Business (B2B) exemptions for subcontractor services. The Group continues to focus on prudent financial planning and operational efficiency to mitigate these external pressures.
Summary and Outlook
EPICON’s second-quarter results paint a picture of a company in a strategic growth phase. The acquisition of CESB has successfully boosted the top line, validating the Group’s expansion strategy. However, this growth has come at the cost of short-term profitability due to higher operating expenses. The key positive is the formidable RM836 million order book, which provides a solid foundation for future earnings. Looking ahead, EPICON’s success will depend on its ability to effectively manage costs, integrate its new subsidiary, and convert its strong order book into improved profit margins in a supportive but challenging market.
Key points for investors to consider:
- Acquisition-Led Growth: The 11% quarterly revenue increase was driven by the new CESB subsidiary, highlighting a successful inorganic growth strategy.
- Margin Compression: Higher staff costs have squeezed profit margins, a critical area to monitor in the upcoming quarters.
- Strong Earnings Visibility: The RM836 million order book is a significant strength, providing a clear runway for future revenue.
- Industry Headwinds: The company faces external pressures from rising labor costs and tax framework changes, which will require prudent management to navigate effectively.
Final Thoughts
From my perspective, EPICON’s latest report reflects a company executing a deliberate transition. The move to acquire CESB is a clear signal of its ambition to scale up within the construction industry. While the immediate dip in profitability might raise questions, it is a common trade-off for long-term strategic positioning. The crucial metric to watch going forward will be the Group’s ability to translate its expanded operational scale and higher revenue into sustainable margin improvement.
Do you think EPICON can successfully manage its rising costs to improve profitability in the coming year? Share your insights in the comments below!
