Cropmate’s Q2 2025 Report: A Dive into a Newly Listed ACE Market Player
Fresh off its listing on the ACE Market in December 2024, Cropmate Berhad has released its financial results for the second quarter ended June 30, 2025. For investors keeping an eye on new entrants in the agricultural sector, this report offers the first detailed glimpse into the company’s performance post-IPO. While the company demonstrates profitability, it also navigates the typical challenges of market dynamics. A key highlight for shareholders was the payment of a final dividend for the financial year 2024, signalling a commitment to rewarding its investors early in its public journey. Let’s break down the numbers and see what they tell us.
Core Data Highlights
In its second quarter, Cropmate reported a steady, albeit slightly softer, performance compared to the preceding quarter. Here’s a snapshot of the key financial figures for the three months ended June 30, 2025.
Q2 2025 Financial Snapshot
- Revenue: RM 45.74 million
- Profit Before Tax (PBT): RM 4.60 million
- Net Profit: RM 3.45 million
- Basic Earnings Per Share (EPS): 0.47 sen
Quarterly Performance Breakdown
When compared to the immediate preceding quarter (Q1 2025), both revenue and profit saw a slight decline. The company attributes this primarily to a decrease in the sales volume of fertiliser sold during the period.
Q2 2025 (Current Quarter)
- Revenue: RM 45.74 million
- Profit Before Tax: RM 4.60 million
Q1 2025 (Preceding Quarter)
- Revenue: RM 48.62 million
- Profit Before Tax: RM 4.97 million
For the first six months of 2025, Cropmate has accumulated a total revenue of RM 94.36 million and a net profit of RM 7.20 million. The company’s operations remain heavily focused on the domestic market, with local sales in Malaysia contributing a substantial 96.9% to the Group’s total revenue.
Deep Dive into Financial Health
Balance Sheet Stability
Cropmate’s financial position appears robust. As of June 30, 2025, total assets stood at RM 130.3 million, an increase from RM 124.1 million at the end of 2024. This growth was supported by a healthy equity base of RM 88.6 million. Notably, the balance sheet shows a new “Other investment” of RM 29.6 million and an increase in trade receivables, indicating active capital allocation and business activity.
Cash Flow Movements
The cash flow statement reveals a significant use of cash during the first half of the year. The Group’s cash and cash equivalents decreased from RM 46.15 million at the start of the period to RM 12.44 million. While net cash used in operations was a modest RM 2.66 million, the primary driver for this decrease was investing activities, which consumed RM 31.66 million. This was largely due to the RM 29.6 million allocated to “other investments” and RM 2.05 million for the purchase of plant and equipment, reflecting the company’s strategy to deploy its capital for future growth.
Strategic Use of IPO Proceeds
The company is actively utilising the RM 42.0 million raised from its IPO. A significant portion (RM 16.7 million) is earmarked to part-finance the acquisition of two factory lots, a corporate proposal that is still in progress. Another RM 3.17 million is allocated for capital expenditure, of which over RM 1 million has already been spent. This demonstrates a clear roadmap for expansion and operational enhancement.
Risk and Prospect Analysis
Cropmate’s future is intrinsically linked to the health of Malaysia’s agriculture industry, particularly the oil palm and durian sectors, which are its main customers. This dependency presents both opportunities and risks.
The company acknowledges that its performance can be influenced by changes in political, social, and economic conditions. Factors such as tariffs, trade restrictions, or disruptions in the supply chain could impact the demand for fertilisers. However, with a strong foothold in the domestic market, the Group remains vigilant and is prepared to take necessary measures to ensure its financial performance remains satisfactory for the remainder of 2025.
Summary and Investment Recommendations
Cropmate Berhad’s second-quarter report paints a picture of a profitable and fundamentally sound company that is in the early stages of its growth journey as a public entity. Despite a minor sequential dip in revenue, its ability to generate profit and its commitment to shareholder returns through dividends are positive indicators. The significant deployment of cash towards investments and acquisitions highlights a forward-looking strategy aimed at long-term expansion. Investors will be watching closely to see how these strategic moves translate into future earnings.
Key points for consideration:
- Market Concentration: The Group’s heavy reliance on the Malaysian agricultural sector is a key risk. Any downturn in this industry could directly impact performance.
- Execution of Growth Plans: The successful and timely completion of the proposed acquisition of two factory lots is crucial for the company’s expansion strategy.
- Capital Allocation: The substantial investment of nearly RM 30 million into “other investments” warrants attention. The nature and future returns of this investment will be a key factor in assessing the company’s capital management.
- Working Capital Management: An increase in trade receivables suggests growing sales, but it also requires careful management to ensure healthy cash flow from operations moving forward.
Final Thoughts
From a professional standpoint, this report from Cropmate is what one might expect from a newly listed company transitioning into a more aggressive growth phase. The core business is profitable, but the management is clearly focused on deploying capital to build a larger operational footprint. The slight dip in quarterly revenue is not alarming, but it underscores the inherent cyclicality of the agricultural supply business. The key will be to monitor the execution of their expansion plans and their ability to maintain profitability amidst market fluctuations.
What do you think about Cropmate’s strategy to invest heavily in expansion so soon after its IPO? Share your views in the comments below!
